23/11/2007Asian School of Business, Trivandrum Principles of Marketing Demand: How many will buy?!

23/11/2007Asian School of Business, Trivandrum Overview Types of Demand Estimating Demand

23/11/2007Asian School of Business, Trivandrum Demand Market demand: total volume that would be bought by –a defined customer group –in a defined geographical area –in a defined time period –under a defined marketing program Company demand: the company’s estimate of market demand at different levels of it’s marketing effort, in a given time.

23/11/2007Asian School of Business, Trivandrum Market Demand It need not be a fixed number, it shows the state of the market-prosperity/decline. Market Minimum: demand that takes place without any marketing expenditure. Market Potential: the upper limit, beyond which extra expenditure is useless. Market sensitivity: distance between MP & MM Market Forecast: Somewhere in between.

23/11/2007Asian School of Business, Trivandrum Company Demand The company’s estimate. Depends on its own products, prices, ads and on the competitor’s Co. Sales Potential: sales’ upper limit as marketing effort increases. Co. Sales Forecast: expected sales based on a chosen plan. Leads to sales quota (higher). Sales Budget: conservative estimate of sales volume for production (lower)

23/11/2007Asian School of Business, Trivandrum Estimating Demand Current Demand: Total Market Potential Total Market Potential: maximum amount of sales. Common method-Potential number of buyers X average quantity purchased by him X price Potential number of buyers- estimate total population & eliminate groups that will obviously not buy…leads to suspect. Suspect is researched to find prospect

23/11/2007Asian School of Business, Trivandrum Estimating Demand Current Demand: Total Market Potential Chain Ratio Method: multiply base with many percentages Demand = Population X X personal discretionary per capita income X average % of income spent on food X average % of food expense spent on beverage X average % of beverage expense spent on alcohol X average % of alcohol expense spent on beer X average % of beer expense spent on light beer

23/11/2007Asian School of Business, Trivandrum Estimating Demand Current Demand: Area Market Potential Companies have to select the best territories to market Market Buildup Method: Identify all potential buyers in each area & estimate their purchases. Multiple Factor Index Method: Find out factors that may effect sales and give weights. Eg. Population, Disposable income, retail sales

23/11/2007Asian School of Business, Trivandrum Estimating Demand Current Demand: Area Market Potential Multiple Factor Index Method: E.g.. Population, Disposable income, Retail sales First, give weights based on data- 0.5, 0.2, 0.1 If Kerala has 3% of India’s population, 2% of income and 1% of retail sales Buying Power Index: 0.5(3)+0.2(2)+0.1(1)=2.0

23/11/2007Asian School of Business, Trivandrum Estimating Demand Sales Figures in Kerala Trivandrum Alappuzha Kochi Find out where brand is more developed than the category Percent of Indian brand sales A Percent of Indian category sales B Brand Dev Index A/B X 100

23/11/2007Asian School of Business, Trivandrum Estimating Future Demand Survey of buyer’s intention Sales force opinion Expert opinion Past sales analysis Market testing using prototype

23/11/2007Asian School of Business, Trivandrum Thank You End of Session