1. Analysis for Marketing Planning
Market Sensing:
Measuring Marketing Opportunities
Industry Analysis

2. What is Market Sensing?
Open-minded inquiry about market, competitors, and customers
Disseminating the information
Making sense about the information
Using the information to make strategic decisions
Evaluating outcomes

3. Measuring Marketing Opportunities
Potentials
Market potential
Area potential
Sales potential

4. Comparing Potential to Actual
Market Potential
Primary (Basic)
Demand Gap
Market Demand
Selective (Company)
Demand Gap
Company Demand

5. Why Estimate Potentials?
To evaluate market opportunities, i.e., entry/exit decisions
To make resource-level decisions
To make location, salesforce, and advertising decisions
To set objectives and evaluate performance
To help with developing forecasts

6. How to Estimate Potentials
Often relies on:
Assumptions.
Published data (industry publications, gov’t sources).
Variables that correlate closely to market potential.

7. Market Potential MP=N x P x Q MP=market potential
N=number of possible buyers
P=average selling price
Q=average number purchased by each buyer

8. Example: What’s the market potential for CD’s?
Assumptions:
Everyone in U.S. > 14 years buys, on average, 4 CD’s per year at ave. price of $14/CD

9. Area Potential
General Sales and Marketing Management buying power index:
Area potential = 0.2 x (% of area population) x (% of area retail sales) x (% of area disposable income)

10. Sales Potential
Market potential x potential market share

11. Demand: Forecasts To answer “what-if” questions To help set budgets
To provide a basis for a monitoring system
To aid in production planning
To help financial analysts value a company

12. Planning Assumptions Forecasts are based on assumptions about:
customer behavior
past and planned product strategies
competitor actions
the environment
Forecast a range of possible outcomes

13. Subjective or Judgment-Based Forecasting Methods
Naïve extrapolation
Sales force composite
Jury of expert (executive) opinion

14. Customer-Based Forecasting Methods
Market surveys
Market tests

15. Sales Extrapolation Forecasting Methods
Moving Average
1st Qtr
2000
$500K
2nd Qtr
2000
$600K
3rd Qtr
2000
$700K
4th Qtr
2000
$600K
1st Qtr
2001
$633.3K
Average =
$600K
Average =
$633.3K
Average =
$644.4K

16. Percent Rate of Change 1st Qtr 1998 $100K 1st Qtr 1999 $125K
To predict sales for 1st quarter 2000:
% change=25%
Sales = $125K + ($125K x .25)
= $125K + $31.25K
= $156.25K

17. Regression Sales = b0 + b1(time) (base + trend)
Sales = b0 + b1(advertising) + b3(price) + b4(competitors’ prices) + b5(competitors’ advertising) + b6(disposable income)

18. Leading Indicators

19. Estimating Market Share
Market share index =
product awareness x (70%)
product attractiveness x (65%)
intention to buy x (60%)
product availability x (60%)
product purchase (50%)
= 8%

20. Market Development Index
What’s the potential for the market to develop?
MDI= current market demand
maximum market potential
X 100

21. Interpreting MDI MDI < 33 Considerable market growth potential.
Can grow market with high prices and basic benefits.

22. MDI 33-67
Growth is possible, but need to offer more product variations and lower prices; expanded distribution.

23. MDI>67
Still room for market growth, but more difficult.
Need very customer-focused solutions.

24. Industry Analysis
Why is industry analysis an essential component of marketing planning?

25. Market Attractiveness
Size, growth, & competitive intensity of a market
Is the industry sufficiently attractive to warrant investment in it?

26. What are the Bases for Industry Analysis?
Aggregate market factors
Competitive factors
Environmental factors

27. Five Forces Model New Entrants Industry Competitors Intensity of
Threat of new entrants
Industry
Competitors
Intensity of
Rivalry
Suppliers
Bargaining
power of
suppliers
Bargaining
power of
buyers
Buyers
Threat of substitutes
Substitutes

28. Attractiveness to Entrants