Monoj Kumar Majumder Dept. of Agricultural Economics SAU, Dhaka

This lecture organized into seven sections – 1. Situational analysis and specification of objectives 2. Collection of secondary information 3. Conduct a market survey 4. Characterization of the market 5. Demand forecasting 6. Uncertainties in demand forecasting 7. Market planning

Key steps in market and demand analysis Collection of secondary information Conduct of market survey Characterization of the market Collection of secondary information Situational analysis and objectives specification Characterization of market Conduct of market surveys Demand forecasting Market planning

Situational analysis and specification of objectives Who are the buyers of air coolers? What is the total current dd for AC? What is the break-up of demand for AC of different sizes? What price will the customers be willing to pay? What price and warranty will ensure its acceptance? What channel of distribution are most suitable?

Collection of secondary information Secondary information: Sources of secondary information- BBS, Bangladesh Economic Review (BER), Annual report of different ministry, different company report, News paper, etc.

Evaluation of secondary information  Who gathered the information and what was the objectives?  When was the information gathered and when was it published?  How representative was the period for which the information was gathered?  Population and Sample size  How representative was the sample?  Process of information gathering  sampling technique  Was statistical analysis properly applied?

Conduct a market survey Market survey two types- 1. Census survey : cover whole population. 2. Sample survey-  Socioeconomics profile of the buyers  Demand in different segment of the market  Purchasing plans and intention  Satisfaction and dis-satisfaction about the existing one.  Thinking about new technologies

Steps in a sample survey Define target group Select the sampling scheme and sample size Develop a questionnaire Recruit and train the field investigators information collection Scrutinize the gathered information Analyze and interpret the information

Some problems Please read it form book

Characterization of the market 1. Efficient demand in the past and present (production + imports- Exports-change in stock levels) 2. Breakdown of the demand (1. nature of product 2. consumer group 3. geographical location) 3. Price 4. Modes of distribution and sales promotion 5. Consumers (age, sex, income, profession, preference, habit, etc) 6. Govt. policy

Demand Forecasting 1. Qualitative Methods These methods rely essentially on the judgment of experts to translate qualitative information into quantitative estimates. The important qualitative methods are- i.Jury of executive methods ii.Delphi method 2. Time series projection Methods These methods generate forecasts on the basis of an analysis of the historical time series. Methods are- i.Trend method ii.Exponential smoothing method iii.Moving average method 3. Casual MethodsForecast on the basis of cause-effect relationship. i.Chain ratio method ii.Consumption level method iii.End use method iv.Leasing indicator method v.Econometric method

Delphi Method of forecasting The Delphi method is a structured communication technique, originally developed as a systematic, interactive forecasting method which relies on a panel of experts. The experts answer questionnaires in two or more rounds. After each round, a facilitator provides an anonymous summary of the experts’ forecasts from the previous round as well as the reasons they provided for their judgments. Thus, experts are encouraged to revise their earlier answers in light of the replies of other members of their panel. It is believed that during this process the range of the answers will decrease and the group will converge towards the "correct" answer. Finally, the process is stopped after a pre-defined stop criterion (e.g. number of rounds, achievement of consensus, stability of results) and the mean or median scores of the final rounds determine the results.forecasting meanmedian Delphi is based on the principle that forecasts (or decisions) from a structured group of individuals are more accurate than those from unstructured groups. The technique can also be adapted for use in face-to-face meetings, and is then called mini-Delphi or Estimate-Talk-Estimate (ETE). Delphi has been widely used for business forecasting and has certain advantages over another structured forecasting approach, prediction markets. (Wikipedia)prediction markets

Trend projection method The trend projection methods involves (a) determining the trend of consumption by analyzing past consumption statistics (b) projecting future consumption by extrapolating the trend We use simple linear relationship- Y t = a + bT Y = demand for the year t T = Time variable A = intercept of the relationship B = slope of the relationship

We know, b = ΣTY –nTY/ ΣT 2_ nT 2 a = Y – b T -,MMMK T 2

Demand data YearDemandYear of analysis

Calculate the values TYTYT2T ΣT = 91 T = 6.5 ΣY = 269 Y = ΣTY = 1998ΣT 2 = 819

b = 1998 – / = A = o97 * 6.5 = 12.08