By:-Pragna PatelPGDM 1st yearNova Business school

IntroductionMarket measuring and forecasting requires an

analysis of the market with an aim of expressing it in quantitative (numeric) quantities both present and in the future.

The quantitative measurement and forecasting of the market, together with its qualitative characteristics, are used as a basis for decision making by marketing management.

Once the research is complete, the company must measure and forecast the size, growth, and profit potential of each market opportunity

Need for measurement and forecasting

The main goal of market measurement and forecasting is to serve as an aid in the decisions that marketing management has to make.

Knowledge of market sizes and probable growth patterns provide the basis for the selection of attractive markets.

It helps in taking decisions in a more objective and scientific manner and to lessen the risk and uncertainty that accompany subjective decisions and guesswork.

It helps organization to decide how best to allocate its marketing resources and activities among market segments in which it is already active.

Levels of market measurementConsumer level Product level Geographic levelTime level

Relevant markets for measurementPotential market Available market Target market Penetrated market

Total market (eg South Africa in total)

100%

Available market (eg metropolitan areas)

60%

Target market (eg age group 15-35)

40%

Penetrated market (actual buyers)

20%

Indicators for evaluating companies competitive position in the market Sales potential

refers to the quantitative indication of what the organization's probable sales in a total market, available market and/or target market should be in view of various possible marketing effort.

Market share indicates the relationship of an organization's sales to the sales of all

participants (competitors) in the same market

It must be noted that these two measures of market share can differ for the same company

Methods of market measurementTotal market potentialArea market potentialTotal industry sales and market shares

Total market potentialThe basic method

Q = n x q x p

where: Q = total market demand n = total number of buyers in the market q = average quantity purchased by a buyer per time

period p = average price of the product per time period

Area market potentialMarket build-up method –business marketers

The method involves the determination of all potential buyers of the product and the quantities they will buy.

The Multiple-factor index method-consumer marketersThe method is based on a statistical index calculated

from the number of potential buyers that form part of a specific market and should be used as a relative measure.

A market index can then be calculated from the various applicable indices for that particular region or market.

Total industry sales and market shares The industry trade association will often collect and publish total industry

sales, although it usually does not list individual company sales separately. With this information, each company can evaluate its performance against the whole industry .

Another way to estimate sales is to buy reports from a marketing research firm that audits total sales and brand sales.

Forecasting Demand and MeasurementPurpose:

Identify market opportunitiesHow:

Measure and forecast size, growth and profit potential of market opportunities

Who: Marketers are responsible for preparing sales

forecast which are based on estimates of demand

Why demand forecastingAppropriate production scheduling so as to avoid the

problem of over-production & the problem of short-supply.Helping the firm to reducing costs of purchasing raw

materials.Determining appropriate price policy.Setting sales targets & establishing controls & incentives.Evolving a suitable advertising & promotion programme.Forecasting short-term financial requirements.

Market Forecast and Market Potential

Market ForecastMarket demand corresponding to the level of

Industry marketing expenditure.

Market PotentialIs the limit approached by the market demand

as an industry marketing expenditures approach infinity for a given marketing environment.

Market demand function

Major Concepts in Demand Measurement

1. Market demand

2. Company demand Demand function Sales forecast Potential

Market Demand and Company DemandMarket Demand

total volume that would be bought.

A defined marketing program

by a defined customer group

in a defined geographical area

in a defined time period

in a defined marketing

environment

Market Demand and Company DemandCompany Demand

Is the company’s estimated share of market demand at alternative levels of company marketing effort at a given time period

Company Sales Forecast and Sales Potential

Company Sales ForecastIs the expected level of company sales based on a

chosen marketing plan and an assumed target market

Company Sales Potential is the sales limit approached by company demand as a

company marketing effort increases relative to that of competitors

Estimating Future DemandAll forecasts are built on one of the three

information bases:1. What people say. (Survey)

2. What people do (Test Market)

3. What people have done. (Buying History)

Estimating Future DemandIt can be estimated bySurvey of buyers behavior

Experts opinion

Composite of sales force opinion

Past sales analysis

Market test method