How can company's accurately measure and forecast demand?

How can companies accurately

measure and forecast demand?

5.

Finance Manufacturing Purchasing HR

Sales forecast made by marketing

The Need..

Potential market

Available market

Target market

Penetrated market

The measure of market demand..

Some definitions…

Market Demand: Total volume bought by the target market.

Market Forecast: The market demand corresponding to the level of industry marketing expenditure.

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

And some more..

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.

Estimating current market demand

Total Market Potential

Total market potential = potential number of buyers X Avg. quantity

purchased X The price

Estimating current market demand

Area Market Potential

Area market potential

The Market Build-up method:

= total number of buyers X

estimated quantity purchased by each

buyer

Estimating current market demand

Area Market Potential

Multiple factor index method:

“An index may be a function of population,per capita income ,number of professionals et al. and is determined

using past sales”.

Estimating future market demand

Survey of Buyer’s intentions

Estimating future market demand

Composite of sales force opinions

Estimating future market demand

Expert opinion

Estimating future market demand

Past sales analysis

Estimating future market demand

Market-test method: Using the beta

version.