Transcript

Chapter Three

Market Potential, Market Demand, and

Market Share

Copyright © 2009 Pearson Education, Inc.  Publishing as Prentice Hall 3-2

Market Potential, Market Demand, and Market Share

• Market definition

• Market potential

• Market development index

• Managing market growth

• Product-market vs. product life cycle

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Benefits of a Broad Market Definition

• Reveals new opportunities in light of a broader set of customer needs

• Enables management to recognize potential substitutes and competitive threats

• Provides management with a thorough understanding of fundamental customer needs

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Estimating Market Potential

Market Potential = 4 billion potential x 35% buying ceiling = 1.4 billion users

Figure 3-5 Estimating Market Potential — Personal Computer

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Market Development Index

• MDI = Current Market Demand

Market Potential

• Low MDI– Untapped market potential

X 100%

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Factors Limiting Full Market Development

Figure 3-7 Factors Limiting Full Market Development

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Market Potential and Market Growth

• Forces affecting rate of market growth– Market potential– Market penetration– Rate of entry

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Managing Market Growth

• Major Customer Groups:– Innovators– Early adopters– Early majority– Late majority– Laggards

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Managing Market Growth

Figure 3-8 Customer Entry and Market Development

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Accelerating Market Growth

Figure 3-10 Customer and Product Forces Driving Market Growth

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Life-Cycle Demand, Margins, and Marketing ExpensesFigure 3-16 Life-Cycle Demand, Margins, and Marketing Expenses

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Market Share Metrics

Figure 3-18 Market Share Metrics and Share Development Path

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Market Share Metrics

• Market Share Index (MSI) = Product X Product X Price X Product X Service Awareness Preference Acceptability Availability Experience

• Share Development Index (SDI) = Market Share Index Share Index Potential

X 100

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Managing Growth Potential

Figure 3-20 Managing a Business’s Growth Potential

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Review

• Market definition

• Market potential

• Market development index

• Managing market growth

• Product-market vs. product life cycle

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• Figure 2-8 Sante Fe Sportswear

• Profits and Marketing Profitability

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Copyright © 2009 Pearson Education, Inc.  Copyright © 2009 Pearson Education, Inc.  Publishing as Prentice HallPublishing as Prentice Hall

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