Chapter 8. Organizational
Demand Analysis
BA 303 - L.P.Chew
OUR TERMINOLOGY…
POTENTIAL= POSSIBILITIES
FORCAST = EXPECTATIONS
MARKET = INDUSTRY
SALES = COMPANY
The formulation of market strategy
is planned on the basis of the
marketing potential associated with
each of the firm's target segments
Once marketing strategy
plans are set, a sales forecast
can be developed and then
used to guide tactical
production, advertising, and
logistics decisions
Chapter 8. Organizational
Demand Analysis
• pivotal role of market potential
analysis and sales forecasting in
planning and controlling marketing
activities, and to provide a firm
understanding of the various
approaches for measuring potential
and forecasting sales.
Chapter 8. Organizational
Demand Analysis
• chapter focuses on the different
approaches for calculating market and
sales potentials
• qualitative and quantitative forecasting
approaches are discussed in terms of the
applicability to various forecasting
situations. Executive judgment, sales force
composite, and the Delphi method are the
qualitative forecasting methods
Chapter 8. Organizational
Demand Analysis
• Quantitative methods, including time
series analysis and causal techniques
• Executive judgment, sales force
composite, and the Delphi method are the
qualitative forecasting methods
• These qualitative methods are most
effectively applied to forecasts for new
products or in situations where little
historical data exists
Methods of Sales Forecasting (1)
1.
2.
3.
4.
5.
Simple Trend Analysis—sales forecast based on
firm’s recent performance.
Market Share Analysis—similar to trend
analysis but assumes market share will stay the
same.
Jury of Executives—company experts predict
sales.
Sales Force Surveys—salespeople share
experiences and customer feedback.
Consumer Surveys—measure attitudes, purchase
intentions, expectations, consumption rates, and
SWOT.
Methods for Sales Forecasting (2)
6.
7.
8.
9.
Chain-Ratio Method—firm starts with general
market information and then computes a series of
more specific information. Combined data yield a
sales forecast.
Market Build Up Method—firm gathers data from
small, separate market segments and aggregates
them.
Test Market—sales estimate from short-run,
geographically limited sales of new products.
Advanced Statistical Analyses—methods for
sales forecasting that include computer simulations
TIME SERIES
• Time series models are based on the
accuracy of historical sales patterns
when sales trends are not likely to
change in the future. Time series
models are most useful when market
forces are relatively stable within
forecasting horizon.
Moving averages/ exponential
smoothing
• Moving averages is a method
based upon a specified historical
period to forecast the value for a
future period.
• When differential weights are
desired, such as for recent years,
exponential smoothing can be
used.
Multiple regressions models
• Multiple regressions models, employed
when a number of factors have an impact
on sales, allow managers to forecast
industry sales, as well as incorporate the
expected effects of any controllable
marketing variables which are likely to
be significant when forecasting company
sales.
Sales penetration is the degree to
which a company achieves its sales
potential. A high level of sales
penetration
usually means
•
there is little room for growth.
1. Sales penetration = Actual sales/Sales
potential.
2. A firm with high sales penetration must
realize that diminishing returns may occur if it
attempts to convert remaining nonconsumers,
since costs may outweigh revenues. Other
segments may be better opportunities.
LINDELL MANUFACTURES INK
FOR FOUR TYPES OF PRINTERS
IN FIVE STATES.
HISTORICAL SALES DATA SHOWS
THAT INK COSTS THESE
PRINTERS .1% OF EACH SALES
DOLLAR.
• HOW MUCH INK DID THEY CONSUME IN THE
MOST RECENT YEAR THAT YOU ARE ABLE TO
FIND IN OUR LIBRARY. I SUGGEST THAT YOU
USE THE 1997 CENSUS OF MANUFACTURESOR
THE MOST CURRENT ANNUAL SURVEY OF
BUSINESS (MANUFACTURES).
LINDELL MANUFACTURES INK
FOR FOUR TYPES OF PRINTERS
IN FIVE STATES.
. • PLEASE CONSULT YOU PACKET FOR A
LIST OF SECONDARY DATA SOURCES TO
ACCESS INCLUDING THE
AFOREMENTIONED. KEY: USE $ VALUE
OF SHIPMENTS.
• YOU MAY WORK WITH THE SIC CODES,
RATHER THAN THE NAICS CODES, BECAUSE
THEDATA MAY BE EASIER TO FIND IN SIC,
WHILE WE ARE IN TRANSITION FROM SIC TO
NAICS
LINDELL MANUFACTURES INK
FOR FOUR TYPES OF PRINTERS
IN FIVE STATES.
OHIO,
. • STATES.....PENNSYLVANIA,
MICHIGAN, INDIANA AND ILLINOIS
• SIC / NAICS CODES OF PRINTERS.........
• 2711- NEWSPAPERS
• 2721- MAGAZINES
• 2732- BOOK
• 2751- COMM LTR HD PRESS. PRINTING
LINDELL MANUFACTURES INK.
• A- WHAT WAS THE TOTAL INK/PRINTER
MARKET FOR THIS FIVE STATE REGION?
• B- WHAT IS THE TOTAL MARKET BY
STATE?
• C- WHAT IS THE RELATIVE MARKET FOR
EACH STATE?
• D- HOW WOULD YOU PROJECT THE $
MARKET FOR THE COMING YEAR 2002?