1. Demand Analysis & Sales Forecasting Dr. Dawne Martin Business Marketing October 11, 2011

2. Administrative Things Exam 2, October 27 Part III of Project Due 10/31 For next time: Chapter 6 & 7

3. Market Segmentation Approaches What are the criteria for a good market segment? What are the primary bases of segmentation used in B2B marketing? When are they used? How is the market segmented in your industry?

4. Types of Forecasts Sales Forecast Market Potential Industry Sales Sales Potential Market Forecast (Market Demand)

5. Questions Why do we need to estimate market demand? What are the uses for sales forecasts? Why is it important that they are as accurate as possible?

6. Examples of Forecasts Used in Business Marketing Sales Management Decisions Assessing market opportunity & allocating resources Evaluating competitive performance Planning for manufacturing and inventory Assessing the size of the sales force Type of Forecast Market potential & market forecast Sales potential Sales forecast Sales forecasts

7. Forecasting Approaches: Top-Down Forecast of general economic & business conditions for country Market potential for relevant industry Factors affecting company’s share of total industry sales Sales potential for company as % of industry sales Company sales forecast Zone, region, district, territory & account forecasts

8. Forecasting Approaches: Bottom-Up Sales person’s forecast of accounts Combined into territory forecasts Combined into District, Region, Zone forecasts Company Sales Forecasts

9. Determining Market & Sales Potential Statistical Series Assumes there is a good relationship between demand and statistical series Example: # employees and number of uniforms Single Series Method Based on NAICS or market segments Steps Select Statistical series Relate series to demand through usage factor Estimate series for desired time period Potential = usage factor X value of series for year Multiple Series Methods – for more complex demand Multiple regression techniques

10. Determining Market & Sales Potential Market Research Uses Estimate demand from few buyers Estimate demand for new products Supplement data from statistical series Methods Surveys – Institute for Supply Chain Management Manufacturing -- h ttp://www.ism.ws/ISMReport/MfgROB.cfm?navItemNumber=12942 h ttp://www.ism.ws/ISMReport/MfgROB.cfm?navItemNumber=12942 Non-Manufacturing -- http://www.ism.ws/ISMReport/NonMfgROB.cfm Non-Manufacturing Focus groups Customer visits

11. Forecasting Methods: Association/Casual & Time Series Association/Causal Correlation Regression Models Leading Indicators http://www.newyorkfed.org/res earch/national_economy/ http://www.newyorkfed.org/res earch/national_economy/ Econometric Models Input-Output Models http://www.bea.gov/industry/ Time-Series Moving Averages Exponential Smoothing Adaptive Filtering Time-Series Extrapolation Times Series Decomposition Box-Jenkins

12. Forecasting Methods: Judgement & Counting Methods Naïve Extrapolation Sales Composite Jury of Executive Opinion Scenario Analysis and Sensitivity Analysis Delphi Technique Historical Analogy Counting Methods Market Testing Market Survey

13. Summary Demand Analysis (Market Potential) and Sales forecasts are used throughout the organization Choosing a forecasting technique is based on: Who and how it will be used Time frame Data available Costs/Benefits Various methods may be used, but should combine top-down & bottom- up

14. Problem Biomedical researchers at a Midwest medical school notes that jaundice is seen in approximately 60 percent of infants. To quickly diagnose the problem, the researchers have developed a device that provides a one-handed test for jaundice. A key benefit from the product is for dark-skinned infants. How would you assess the market potential for this product?