Learing Objectives

1. Learn the types of information that might be gathered as input for marketing decision making.

2. Understand approaches to estimating potential and coming up with forecasts.

3. Better understand the marketing manager's role in market research.
 

Market Potential and Forecasting

         1. Managers are interested in projecting:

                  a. Total Market Potential
                  b. Area Potential
                  c. Total Industry Sales
                  d. Share
                  e. Profit
                  f. Trend

         2. Defining Terms

        Market Potential- maximum dollar or unit sales available to all firms from a defined market in a certain period of time.

        Market Forecast- an estimate of the expected dollar or unit sales from all firms in a given market and time period given  their respective marketing plans.

          Sales Potential- maximum dollar or unit sales available to an individual firm from a defined market with a specified time period.

          Sales Forecast- an estimate of the dollar or unit sales a firm expects to sell in a specified time period under a given marketing plan.
 

         3. Estimating Potential -a & b

                A. Estimating Total Market Potential

                     Define Market

                    Methods

                        1. Number of Users X Usage Rate

                        2. Chain Ratio

                 B. Additional Ideas
                         1. New or Existing Market

                         2. Major Player Review

                         3. Similar Market

                         4. Linked Products/Derived Demand

                  C. Estimating Area Potential

                        Reasons

                            Allocate Budgets

                             Setting Quotas/ Goals

                            Determining Territories
   
                            Locating Stores/ Distribution Points

                      Methods

                         1. Simple Fator e.g, % populations
                         2. Mulit-factor e.g., SMM Buying Power Index

                                     Disposable Income
                                     X Retail Sales
                                     X % of Populations

                                     = BPI Index e.g., 2.04%

                          3. Buildup Methods

                               Indentify Potential Users in Area and Estimate Purchases

                               NAICS (SIC) Codes to identify, then use index based on # of employees, sales, net worth, etc.

         4. Forecasting -c & d

              Forecasting is based on:
                      a. what people say
                      b. what people do
                      c. what they have done in the past

              Objective versus Subjective
 

              Top-down versus Bottom-up
 
 

              Subjective

                   Buyers' Intentions
                   Sales Force Composite
                   Expert Opinion

              Objective

                   Market Tests
                   Time Series
                   Statistical Demand Analysis Market Research
 
 

 Overview

  Market knowledge is the essence of a Market Orientation

     Manager's Role

          1. Decision Maker

          2. Research User

     Research Process

          1. Identify Problems and Establish Objectives

          2. Determine Data Sources

          3. Design Research

          4. Analyze Data

          5. Interpret and Report Results