Estimation of Market Size Existing Products – Sales Forecast New Product – Assessment of Market Opportunity Calculate – Market penetration rates Product penetration rates Market Share

Market Potential Market – Set of consumers who possess some interest in a product OR whom the product is potentially relevant. Available Market – Consumers – Interest, Income and access to market Target Market –Part of available market company wants to pursue

Market demand (for product) Total volume that can be brought by particular – Customer group Time period Marketing environment Marketing program estimation as appropriation for certain level of marketing investment –

Market forecast The market demand corresponding to certain level of marketing expenditure sis called Market Forecast Primary Demand – Product Category – e.g. razors Secondary Demand – Specific brand or product.- e.g. Gillette

Demand forecast Estimation based on total of expenditure by firms Constraints: Market Minimum – Level of demand without marketing spend Market Potential – Further spend on marketing expenditure ineffective for corresponding incremental increase in demand Market Potential dependent on external factors

Market Demand Category Market Expenditure Market Minimum Market Forecast Market Potential Market demand As Function of Marketing Expenditure

Market Demand in Dollars = Market Demand in Units*Avg retail cost

Product Demand Post estimation of Market demand – share of own product – Depends on – Level of expenditure versus competitors Efficiency and effectiveness of marketing expenditures

Calculating Market Share Your part of Pizza Unit Dema nd = Product Demand in Unit Market Demand in Units Dollar Share = Product Demand in Dollar Market Demand in Dollar

Market Vs Dollar Share

Market Penetration Set of consumers who are currently buying Market Penetration Index = Market Demand # of consumers in potential market Low market penetration index – Room to grow

Product Penetration Percentage of consumers in target market who are purchasing particular brand. Product Penetration Index = Product Demand # of consumers in target market Low Penetration Index – Opportunity to grow

Market Build Up Methods Market Demand = # of Buyers in Mkt* (Annual purchase qty)* (average price) Build Up Procedure – by decomposing in parts