Ch.3 Market Potential, Market Demand, and Market Share MKTG 500: Marketing Concepts Go Beach! MKTG 500

Strategic Market Definition of the Beverage Market MKTG 500

Broad Strategic Market Definition “……..” provides three key benefits: It opens the window of opportunity to a broader set of customer needs. It provides better understanding of potential substitutes and competitive threats. It helps a business better understand fundamental customer needs. MKTG 500

Market Potential “……..” is the maximum potential for the market definition. For instance, what is the market potential for disposable diapers? => The number of babies between newborn and 2y. The market potential (maximum number) for personal computers is estimated to be 250 million per year. MKTG 500

Maximum Market Potential and Current Market Demand MKTG 500

Market Penetration and Market Development Index MKTG 500

Customer Adoption and Market Development MKTG 500

Market Demand At any point in time, the market demand for a product is made up of new customers to the market and existing customers who continue to purchase the product. Example: Market demand for PCs Existing customers for PCs repurchase at an average rate of every four to five years. Then, the market demand in 2005 can be written as: Market demand in 2005 = replacement purchases + New customer Purchase = Average 1999 and 2000 + entering market in 2005 = 125 million + 75 million = 200 million Question: What will be the market demand for PCs in 2010? MKTG 500

Product Life Cycle and Market Demand MKTG 500

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PC Market Demand and Marketing Profitability MKTG 500

Sales Forecast How much to produce? Volume (Units) = Market Demand(Units)*Market Share IF the unit volume forecast is correct, and a plant with the right level of capacity in built, total production volume will be near plant capacity, and the best production economies will be achieved. MKTG 500

Market Share Development Tree MKTG 500