Market Demand/Potential

Actual: How much is sold? Potential: How much could be sold? Market Demand Absolute: Upper limit of total demand in defined period of time Relative: Demand in submarket, e.g. customer group, geographic area Evaluate alternative market opportunities Determine sales quotas Determine number of retail outlets Allocate promotional expenditures Allocate sales people Locate facilities

Market Demand – total volume that would be bought by a defined customer group in a defined geographical area in a defined time in a defined marketing environment under a defined marketing program.

Methods for Estimating Demand Market-Buildup Method –Identify number of purchasers X amount of their purchase Multiple – Factor Index –Identify factor(s) correlated to sale of product,

Steps In Calculating Demand Potential (Market Buildup Method): Identify 1. Absolute Target Market & Determine Size 2. Relative Market, e.g. Geographic Territory 3. Other Consumption Constraints 4. Average Purchases per Year per Customer 5. Total Purchases per year per Customer 6. Average Price 7. Total Dollar Purchases per Year 8. Your Company's Share of Purchases

How Can You Define the Diaper Market? Geographic Area Customer Group Product Category Customer Needs

How Can You Define the Disposable Diaper Market? Geographic Area –World vs. U.S. vs. California Customer Group –Mothers of children vs. Adults vs. –Hospitals vs. –Daycare Operators Product Category –Regular vs. Premium –Manufacture Brand vs. Private Label Customer Needs –Special Occasions vs. Diaper Rash –Age of Children –Gender of Children

How Is the Disposable Diaper Market Defined in this Case? California Disposable Diaper Market California Disposable Diaper Market – Diaper Rash California Disposable Diaper Market – Special Occasions

How Are These Diaper Market Potentials Calculated? California Disposable Diaper Market 1. Target Market Children <3 2. Geographic Territory California (11% of U.S.) 3. Consumption Constraints 75% Penetration Use Disposables 4. Average Purchase/Year/Customer 5/day X 365days = 5. Total Purchases/Year 6. Average Price 7. Total $ Purchases

How Are These Diaper Market Potentials Calculated? California Disposable Diaper Market-Diaper Rash 1. Target Market Children <3 2. Geographic Territory California (11% of U.S.) 3. Consumption Constraints 75% Penetration Use Disposables 7.6%* Have Diaper Rash 4. Average Purchase/Year/Customer 5/day X 365days = 5. Total Purchases/Year 6. Average Price 7. Total $ Purchases

How Are These Diaper Market Potentials Calculated? California Disposable Diaper Market-Special Occasion 1. Target Market Children <3 2. Geographic Territory California (11% of U.S.) 3. Consumption Constraints 75% Penetration Use Disposables 20% Special Occasion 4. Average Purchase/Year/Customer 5/day X 365days = 5. Total Purchases/Year 6. Average Price 7. Total $ Purchases

In this case is Market Demand/Potential a threat or opportunity?