1. Chapter Three Market Potential, Market Demand, and Market Share

2. Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 3-2 Market Potential, Market Demand, and Market Share Market definition Market potential Market development index Managing market growth Product-market vs. product life cycle

3. Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 3-3 Benefits of a Broad Market Definition Reveals new opportunities in light of a broader set of customer needs Enables management to recognize potential substitutes and competitive threats Provides management with a thorough understanding of fundamental customer needs

4. Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 3-4 Estimating Market Potential Market Potential = 4 billion potential x 35% buying ceiling = 1.4 billion users Figure 3-5 Estimating Market Potential — Personal Computer

5. Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 3-5 Market Development Index MDI = Current Market Demand Market Potential Low MDI –Untapped market potential X 100%

6. Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 3-6 Factors Limiting Full Market Development Figure 3-7 Factors Limiting Full Market Development

7. Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 3-7 Market Potential and Market Growth Forces affecting rate of market growth –Market potential –Market penetration –Rate of entry

8. Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 3-8 Managing Market Growth Major Customer Groups: –Innovators –Early adopters –Early majority –Late majority –Laggards

9. Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 3-9 Managing Market Growth Figure 3-8 Customer Entry and Market Development

10. Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 3-10 Accelerating Market Growth Figure 3-10 Customer and Product Forces Driving Market Growth

11. Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 3-11 Life-Cycle Demand, Margins, and Marketing Expenses Figure 3-16 Life-Cycle Demand, Margins, and Marketing Expenses

12. Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 3-12 Market Share Metrics Figure 3-18 Market Share Metrics and Share Development Path

13. Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 3-13 Market Share Metrics Market Share Index (MSI) = Product X Product X Price X Product X Service Awareness Preference Acceptability Availability Experience Share Development Index (SDI) = Market Share Index Share Index Potential X 100

14. Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 3-14 Managing Growth Potential Figure 3-20 Managing a Business’s Growth Potential

15. Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 3-15 Review Market definition Market potential Market development index Managing market growth Product-market vs. product life cycle

16. Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 3-16 Figure 2-8 Sante Fe Sportswear Profits and Marketing Profitability All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of the publisher. Printed in the United States of America. Copyright © 2009 Pearson Education, Inc. Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall