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Forecasting & Demand Measurement

The document defines key terms related to demand measurement, forecasting, and estimating future demand. It defines market demand, marketing potential, market forecast, company demand, sales potential, and sales forecast. It also describes several methods for estimating market potential, including market build up based on industry classification, multiple factor index methods, and brand development index. Finally, it outlines different approaches for estimating future demand, such as surveys, test markets, time series analysis, and econometric models.

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442 views17 pages

Forecasting & Demand Measurement

The document defines key terms related to demand measurement, forecasting, and estimating future demand. It defines market demand, marketing potential, market forecast, company demand, sales potential, and sales forecast. It also describes several methods for estimating market potential, including market build up based on industry classification, multiple factor index methods, and brand development index. Finally, it outlines different approaches for estimating future demand, such as surveys, test markets, time series analysis, and econometric models.

Uploaded by

Maan91
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPT, PDF, TXT or read online on Scribd
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Forecasting & Demand Measurement

Demand Measurement
Market Company

Demand

Market Demand

Company Demand Function

Potential

Market Potential

Company Sales Potential

Forecast

Market Forecast

Company Sales Forecast

Market Demand (definition)


Market Demand for a product is the total volume that would be bought by a defined customer group in a defined geographical area in a defined time period in a defined marketing environment under a defined marketing program.

Marketing Potential (definition)


Marketing Potential is the limit approached by Market demand as industry marketing effort (Expenditures) goes to infinity, for a given environment.

Market Forecast (definition)


Only one of the many possible levels of industry marketing effort (expenditure) will actually occur. The Market Demand corresponding to the expected effort is called the Market Forecast.

Company Demand (definition)


Company Demand is the Companys estimated share of market demand at alternative levels of Companys marketing effort in a given time period.

Company Sales Potential (definition)


Company Sales Potential is the sales limit approached by the company demand as the company marketing effort increases relative to that of Competitors.

Company Sales Forecast (definition)


Company Sales Forecast is the expected level of company sales based on a chosen marketing plan and an assumed marketing environment.

Market Build Up Method (area market potential)


Standard Industrial Classification Major Industry Groups Each industry Sub Groups And Product Category Furniture = 25 HH = 251 Wood F=2521

Standard Industrial Classification 2511 2521

Annual Sales (Million) $1 $5 $1 $5

No. of Potential Sales Establishments per Sales (Million) 6 2 3 1 10 10 5 5

M.P.

60 100 15 25

Market

Potential

200

Multiple Factor Index Method Single Index => (say)population %=>Market Potential Buying Power Index (B.P.I.)
B.P.I. Disposable Personal Income Retail Sales U.S. Population % 2.00 1.96 2.28 Weight 0.50 0.30 0.20 2.04

Brand Development Index (B.D.I.)


B.D.I. (a/b) * 100 Territory (City) % Brand Sales %Category (a) Sales (b)

114
65 91 120 140 104

1
2 3 4 5 6

3.09
6.74 3.49 0.97 1.13 3.12

2.71
10.41 3.85 0.81 0.81 3.00

Lower BDI =>Higher Market Opportunity Higher BDI=>Higher Market Opportunity to Share

Industry Sales and Market Shares 1. Industry Trade Association(Elcoma,IEMA,FMA) 2. Markets research Audit Report (ORG,Nielsen) 3. Own methods/ models

Estimating Future Demand


What people say (buyers opinion,sale,expert) What people do (Test Market Response) What people have done (Time Series Statistics)

What people say Survey of Buyers Intentions Do you intend to buy ..within next..year. no chance certain 0.00 100.00 {Purchase Probability Scale} Composite of Sales Force Opinions Expert opinion : Trade,Consultants,associations

What people do Test Market (New Product)

What people have done Post sale analysis Time series Exponential Smoothing Statistical Demand Analysis {Casual Factors} Econometric Analysis {Damo. Guj.}

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