1. 23/11/2007Asian School of Business, Trivandrum 2007 1 Principles of Marketing Demand: How many will buy?!

2. 23/11/2007Asian School of Business, Trivandrum 2007 2 Overview Types of Demand Estimating Demand

3. 23/11/2007Asian School of Business, Trivandrum 2007 3 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.

4. 23/11/2007Asian School of Business, Trivandrum 2007 4 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.

5. 23/11/2007Asian School of Business, Trivandrum 2007 5 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)

6. 23/11/2007Asian School of Business, Trivandrum 2007 6 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

7. 23/11/2007Asian School of Business, Trivandrum 2007 7 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

8. 23/11/2007Asian School of Business, Trivandrum 2007 8 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

9. 23/11/2007Asian School of Business, Trivandrum 2007 9 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

10. 23/11/2007Asian School of Business, Trivandrum 2007 10 Estimating Demand Sales Figures in Kerala Trivandrum3.09 2.71 114 Alappuzha6.74 10.41 65 Kochi1.13 0.81 140 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

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

12. 23/11/2007Asian School of Business, Trivandrum 2007 12 Thank You End of Session