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Copyright 2007 by South-Western, a division of Thomson Learning, Inc. All rights reserved.Developed by Cool Pictures and MultiMedia Presentations 1

Chapter Six

Organizational

Demand

Analysis

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Composed of:

Sales forecasting

Market potential analysis.

Organizational Demand Analysis

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First, what is highest possible level of market

demand that may accrue to all producers in

industry in particular time period?

Second, what level of sales can the firm

reasonably expect to achieve, given particular

level and type of marketing effort?

Organizational Demand

Perspectives

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Secondary Data Internet

Internet has all types marketing intelligence.

Information easy to locate

Internet information more current than hard

data sources

Inexpensive, quick access, easy to use

Can be used for primary data collection

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Before Using Internet Information

Assess quality:

How was it gathered?

Sample size?

Who provided information?

Original purpose for which information wascollected?

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Internet Market Research Limitations

No standards for information

Owner has no requirement to provide account of sites

accuracy.

No review process

People can publish whatever they wantopinion

enters in.

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Sales forecast answers the question:

What level of sales do we expect next year, given particular

level and type of marketing effort?

Relationship Between Potential and Forecast

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Estimates of Absolute Market Potential

Using Statistical Series

1. Select statistical series that appears to relate to

product demand.

2. For each target NAICS industry, determine

relationship of statistical series to potential demandfor product.

3. Forecast statistical series and its relationship to

demand for desired time frame.

4. Determine market potential by relating demand to

future values of statistical series.

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Important Criteria in Selecting

Statistical Series

Data on series must be available.

Future estimates of series should be

easier to predict than product demand

itself would be.

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Estimating Market Potential

Depends On:

How well the demand or usage factor represents

underlying demand.

The ability to estimate future values of the series and

usage factors.

The extent of distortion caused by using averages,gross estimates, and proxies

The quality of the data used.

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A Complete Market Census

is Warranted When:

Markets very concentrated

Direct sales contact

Orders have relatively high value

Unit volume low

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Qualitative Approaches

to Sales Forecasting

Qualitative techniques

Rely on informed judgment and rating

schemes. Include executive judgment method,

sales force composite method, and

Delphi method. Effectiveness of qualitative approaches

depends on close relationships between

customers and suppliers.Copyright 2007 by South-Western, a division of Thomson Learning, Inc. All rights reserved.Developed by Cool Pictures and MultiMedia Presentations

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Qualitative Approaches

to Sales Forecasting

Executive Judgment

Enjoys high level of usage.

Collective expertise, experience, andopinions

Primary limitation: does not systematically

analyze cause-and-effect relationships.

No established formula for deriving

estimates.Copyright 2007 by South-Western, a division of Thomson Learning, Inc. All rights reserved.Developed by Cool Pictures and MultiMedia Presentations

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Delphi Application

Usually applied to long-range forecasting.

Well suited to:

Forecasting for new products

Estimating for future events when

historical data are limited.

Analyzing situations not appropriate forquantitative analysis.

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Quantitative Forecasting Offers Two

Primary Methodoligies

Time series techniques use historical data ordered in time to

project trends and sales growth rates.

Regression, or causal, analysis uses factors that have

affected sales in the past and seeks relationships in

mathematical models.

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Typically, qualitative estimates merged with quantitative

ones.

Summary ofQualitative Forecasting Techniques

Copyright 2007 by South-Western, a division of Thomson Learning, Inc. All rights reserved.Developed by Cool Pictures and MultiMedia Presentations

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IM 9e pp CH06