MarketingManagement.pdf

COVERSTORY examines a mass of syndicated sales data and writes an English-lan-

guage memo reporting the highlights.^31

The first decade of the twenty-first century will undoubtedly usher in further soft-

ware programs and decision models.

N OVERVIEW OF FORECASTING AND

DEMAND MEASUREMENT

One major reason for undertaking marketing research is to identify market opportuni-

ties. Once the research is complete, the company must measure and forecast the size,

growth, and profit potential of each market opportunity. Sales forecasts are used by fi-

nance to raise the needed cash for investment and operations; by the manufacturing

department to establish capacity and output levels; by purchasing to acquire the right

amount of supplies; and by human resources to hire the needed number of workers.

Marketing is responsible for preparing the sales forecasts. If its forecast is far off the mark,

the company will be saddled with excess inventory or have inadequate inventory.

Sales forecasts are based on estimates of demand. Managers need to define what

they mean by market demand.

THE MEASURES OF MARKET DEMAND

Companies can prepare as many as 90 different types of demand estimates (see Fig-

ure 1-12. Demand can be measured for six different product levels, five different space

levels, and three different time levels.

Each demand measure serves a specific purpose. A company might forecast short-

run demand for a particular product for the purpose of ordering raw materials, plan-

ning production, and borrowing cash. It might forecast regional demand for its major

product line to decide whether to set up regional distribution.

WHICH MARKET TO MEASURE?

Marketers talk about potential markets, available markets, served markets, and pene-

trated markets. Let us start with the definition of market:

■ Amarketis the set of all actual and potential buyers of a market offer.

The size of a market hinges on the number of buyers who might exist for a particu-

lar market offer. The potential marketis the set of consumers who profess a sufficient

level of interest in a market offer.

Analyzing

Marketing

(^118) Opportunities
Quantitative Tools Used in
Marketing Decision Support
Systems
TABLE 1.6(cont.)