forecasting and demand measurement
TRANSCRIPT
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Forecasting and Forecasting and Demand Demand
MeasurementMeasurement
Forecasting and Forecasting and Demand Demand
MeasurementMeasurement
Raju VargheseRaju Varghese
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Why Study Demand?• Finance -The cash that is required for
operations and investments.• Operations – To establish capacity and
output levels.• Purchasing – To get the right amount of
supplies.• HR – To get the right number of workers• Marketing- To prepare Sales Forecasts
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Wrong Sales Forecast • Excessive Inventories or
Inadequate Inventory.• Sales Forecasts are based on
estimates of Demand.
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Demand Levels
Time Level Product Level
Space Level
Short Run All Sales World
Medium Run Industry Sales India
Long Run Company Sales
Region
Product Line Sales
Territory
Product Form Sales
Customer
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Types of Markets• Potential Market: Set of consumers
who have income and access to the product offer.
• Available Market: Set of consumers who have interest, income and access to a particular product offer.
• Target Market: Part of the qualified available market the company decides to pursue.
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Types of Markets• Penetrated Products: Is the set
of customers who are buying company’s products.
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Market Demand• 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 programme
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• defined geographical area in a
• defined time period in a• defined marketing environment under a • defined marketing programme
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Market Demand Functions
Q1
Q2
Industry Marketing Expenditure
Mar
ket
Dem
and
Market Potential
Market Forecast
Market Minimum
Q2 - Q1 = Small / Non expansible Market
Q2 - Q1 = Big / Expansible Market
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Market Penetration Index
• Low MPI = Substantial growth prospects for all firms.
• High MPI = High cost in attracting remaining prospects.
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Share Penetration Index
• Share Penetration Index = Current Market
Share Potential Market
Share
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Product Penetration Percentage
Sr. No.
Product Penetration %
1 TV 40
2 Motorcycles 6
3 Scooters 4
4 PC at Home 1
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Product Penetration Percentage
• Lower the Product Penetration Index – Higher the Market Potential
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Company Demand• It is the company’s estimated
share of market demand at alternative levels of company marketing effort at a given time period.
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Company Demand • The company’s share of market
demand depends on how its products, services, etc are perceived in comparison to the competitor.
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Estimating Current Demand
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Company Sales Forecast
• It is the expected level of company sales based on a chosen marketing plan and an assumed marketing environment.
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Total Market Potential• TMP = Potential Number of buyers * Average
Quantity Purchased by a buyer * The Price The maximum amount of sales that
would be available to all the firms in an industry in a given time period under a given level of industrial marketing efforts and environmental conditions.
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Total Market Potential• Estimate the potential number of
buyers and then eliminate the groups that will not buy the product.
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Area Market Potential• Market Build Up Method: Identify
all the potential buyers in each market and estimate their potential purchases.
• Ex.Pumps
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Multiple Factor Index Method
• Customers for consumer products are numerous.
• Hence predicting demand will be a problem.
• Hence such companies use existing indices.
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• MICA rural Market Ratings• RK Swamy- BBDO Guide
Multiple Factor Index Method