MARKET DEMAND, SIZE AND

MARKET SHARE ANALYSIS

 MEASURING A MARKET
• Potential Market: It is the set of consumers who
possess some interest in a product or to whom the
product is potentially relevant.
• Available Market: It is the set of consumers who
have interest in, income for, and market access to a
particular product.
• Target Market: It is the part of the available market
the company decides to pursue with marketing
activities.
 CLASSIFICATION OF DEMAND
Consumer’s good Producer’s good
• Consumers’ goods are also known • Producers’ goods are also known
as Direct Demand as Derived Demand.
• Consumers’ goods are directly used • Producers’ goods are not used by
for final consumption consumers final consumption, they
• Cloths, houses, other goods. are used for further production
Example: food, bread, tea, • Machines, tools, coal, raw materials,
scooters, etc etc
 CONTD
Perishable Good Durable good

• Consumed only once • Used number of time over a period

• Fruit, Vegetable, milk etc of time
• Refrigerator, TV, furniture etc
• Producers' good for perishable item
Is different from durable • Producer’s good are different
 CONTD..

• Derived Demand • Autonomous demand

• Firm Demand • Industry Demand
• Demand for total market • Demand for market
segment
 ESTIMATING MARKET DEMAND
• Market Demand: It is the total volume that would be bought
by a particular customer group, in a particular time period,
in a particular marketing environment, under a particular
marketing program.
• Market Forecast: The market demand corresponding to a
certain level of marketing expenditures is called the market
forecast.
• Primary Demand: Measures the total volume demanded by
customers for a product category (ex. Razors)
• Secondary Demand: Measures the total volume demanded
by customers for specific brand or product (gillete razors)
• Market Minimum: There is a certain level of demand for the
product that would occur without any marketing spending,
which we call the market minimum.
• Market Potential: At some point, marketing expenditures
become ineffective at generating incremental demand
because we have tapped out the market; this point is
known market potential.
• Market Potential is dependent on a given external market
environment.
 DEMAND IN CURRENCY

• Market Demand= Market Demand in units* avg.

retail price (currency)
• Product Demand= Product Demand in units* avg.
Price point of firm (currency)
 MARKET SHARE
• Can be expressed in Unit or revenue
• Unit Share= Product demand in units/ Market demand in
units
• Unit Share= Product unit sales/ Market unit sales
 MARKET PENETRATION
• Market Penetration Index measures the percentage of consumers in
the potential market who are currently purchasing a product in the
category
• Market Penetration Index= Market Demand/ No. of consumers in
potential market

• The product/ brand penetration index calculates the percentage

consumers in a particular target market who are purchasing a
particular product/brand
• Product Penetration Index= Product Demand/ No. of consumers in the
target market
 MARKET BUILD UP METHOD

• Market Demand= (No. of buyers in the

market)* (Annual quantity purchased by an
average buyer)* (average price paid for a
unit)
 PREDICTIVE TECHNIQUES FOR
DEMAND FORECASTING
• Qualitative assessment
• Forecasting demand based on expert opinion. Some of the types in this method are,

• Unaided judgment
• Prediction market
• Delphi technique
• Game theory
• Judgmental bootstrapping
• Simulated interaction
• Intentions and expectations survey
• jury of executive method
• Quantitative assessment
• Discrete event simulation
• Extrapolation
• Group method of data handling (GMDH)
• Reference class≈ forecasting
• Quantitative analogies
• Rule-based forecasting
• Neural networks
• Data mining
• Conjoint analysis
• Causal models
• Segmentation
• Exponential smoothing models
• Box–Jenkins models
• Hybrid models
• Others are as follows
• a) time series projection methods this includes:

• moving average method

• exponential smoothing method
• trend projection methods
• b) causal methods this includes:

• chain-ratio method
• consumption level method
• end use method
• leading indicator method