1. Forecasting & Demand
Measurement

2. Demand Measurement
Market Company
Demand Market Demand Company Demand
Function
Potential Market Potential Company Sales Potential
Forecast Market Forecast Company Sales Forecast

3. Market Demand (definition)
• Market Demand for a product is the total
volume that would be bought by a defined
customer group in a defined geographical area
in a defined time period in a defined
marketing environment under a defined
marketing program.

4. Marketing Potential (definition)
• Marketing Potential is the limit approached by
Market demand as industry marketing effort
(Expenditures) goes to infinity, for a given
environment.

5. Market Forecast (definition)
• Only one of the many possible levels of
industry marketing effort (expenditure) will
actually occur. The Market Demand
corresponding to the expected effort is called
the Market Forecast.

6. Company Demand (definition)
• Company Demand is the Company’s estimated
share of market demand at alternative levels
of Company’s marketing effort in a given time
period.

7. Company Sales Potential (definition)
• Company Sales Potential is the sales limit
approached by the company demand as the
company marketing effort increases relative to
that of Competitors.

8. Company Sales Forecast (definition)
• Company Sales Forecast is the expected level
of company sales based on a chosen
marketing plan and an assumed marketing
environment.

9. Market Build Up Method
(area market potential)
• Standard Industrial Classification
Major Industry Groups Furniture = 25
Each industry Sub Groups HH = 251
And Product Category Wood F=2521

10. Standard
Industrial
Classification
Annual Sales
(Million)
No. of
Establishments
Potential Sales
per Sales
(Million)
M.P.
2511 $1 6 10 60
$5 2 10 100
2521 $1 3 5 15
$5 1 5 25
Market Potential = 200

11. • Multiple Factor Index Method
Single Index => (say)population %=>Market
Potential
Buying Power Index (B.P.I.)
B.P.I. % Weight
Disposable
Personal Income
2.00 0.50
Retail Sales 1.96 0.30
U.S. Population 2.28 0.20
2.04

12. • Brand Development Index (B.D.I.)
Lower BDI =>Higher Market Opportunity
Higher BDI=>Higher Market Opportunity to Share
B.D.I.
(a/b) * 100
Territory
(City)
% Brand Sales
(a)
%Category
Sales (b)
114 1 3.09 2.71
65 2 6.74 10.41
91 3 3.49 3.85
120 4 0.97 0.81
140 5 1.13 0.81
104 6 3.12 3.00

13. • Industry Sales and Market Shares
1. Industry Trade
Association(Elcoma,IEMA,FMA)
2. Markets research Audit Report (ORG,Nielsen)
3. Own methods/ models

14. Estimating Future Demand
• What people say …
(buyer’s opinion,sale,expert)
• What people do …
(Test Market Response)
• What people have done…
(Time Series… Statistics)

15. • What people say
Survey of Buyer’s Intentions
Do you intend to buy …..within next…..year.
no chance certain
0.00 100.00
{Purchase Probability Scale}
Composite of Sales Force Opinions
Expert opinion : Trade,Consultants,associations

16. • What people do
Test Market (New Product)

17. • What people have done
Post sale analysis
Time series
Exponential Smoothing
Statistical Demand Analysis {Casual Factors}
Econometric Analysis {Damo. Guj.}