How can companies accurately measure and forecast demand

HOW CAN COMPANIES ACCURATELY MEASURE AND FORECAST DEMAND?

EXAMPLE:-

SALES FORECAST

USED BY

Finance to raise cash for investment

and operations.

Manufacturing to establish capacity

and output

Human resource to hire the needed

workers

Potential market

Available market

Target market

Penetrated market

POTENTIAL WAYS TO BREAK DOWN THE MARKET—

Market Demand: Total volume bought by the target market.

Market Forecast: The market demand corresponding to the level of industry marketing expenditure. Company Demand: Company’s estimated share of market demand.

Company sales forecast: Expected level of company sales based on chosen marketing plan.

Company sales potential: Sales Limit approached as the company marketing effort increases relative to that of competitors.

VOCABULARY FOR DEMAND MEASUREMENT:

Market Potential: Limit reached by market demand as industry marketing expenditure reaches infinity.

ESTIMATINGCURRENTDEMANDS

ESTIMATING CURRENT DEMANDS:

TOTAL MARKET POTENTIAL

TOTAL MARKET POTENTIAL =

POTENTIAL NO. OF BUYERS

AVERAGE QUANTITY

PURCAHSEDTHE PRICEX X

ESTIMATING CURRENT DEMANDS:

AREA MARKET POTENTIAL

AREA MARKET POTENTIAL = TOTAL NO. OF

BUYERS

ESTIMATED QUANTITY PURCHASED BY EACH

BUYERX

ESTIMATINGFUTURE

DEMANDS

ESTIMATING FUTURE DEMANDS:

SURVEY OF BUYER’S INTENTIONS

PURCHASE PROBABILITY SCALE

ESTIMATING FUTURE DEMANDS:

COMPOSITE OF SALES FORCE OPINIONS

ASK SALES REPRESENTATIVES TOESTIMATE THEIR FUTURE SALES.

ESTIMATING FUTURE DEMANDS:

EXPERT OPINIONS

ESTIMATING FUTURE DEMANDS:

PAST-SALES ANALYSIS

ESTIMATING FUTURE DEMANDS:

MARKET-TEST METHOD

These slides were created by NANDINI GUPTA, AKGEC Ghaziabad,during a Marketing internshipby Prof. Sameer Mathur, IIM Lucknow