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Lesson Content
LESSON 4
• Ch.8 - Understand customers’ need and demand
UNIVERSITY OF ECONOMICS & FINANCE
• Ch. 8 - Relation of market segmentation &
marketing mix
FINDING MARKETS AND • Ch.9 - Market Forecasting
FORECASTING POTENTIALS • Ch.9 - Validating Market & Demand Potential
• Ch.9 - Methods to evaluating market
Lecturer: Luu Thanh Thuy

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Maslow’s Hierarchy of Need

Chapter 8: Market segmentation
• Understand customers’ need and demand A theory in psychology
proposed by Abraham Maslow
• Relation of market segmentation & marketing mix in his 1943 paper "A Theory
of Human Motivation"

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How markets are segmented? Market Segmentation & Marketing Mix

• Segmentation models should allow product managers

to tailor the marketing mix to specific market
segments or target customer types
• A marketing mix strategy should also focus on the
customers within those segments who have enough
purchasing power to be profitable to the business.

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Market Segmentation & Marketing Mix Defining target market

• The growth of segment

• The number of competitors
Segment 1: Premium Coffee High Price Modern Entertainment, • How distribution channels be available
Student, living amenities, Premium Service,
with family interesting
atmosphere,
Social media… • The profit is able to be gained
inner city…
Segment 2: Student, Standard Coffee Reasonable Comfortable, Discount, local
living away from price friendly place… advertisement,
family ….
Segment 3: office
staff, living
? ? ? ?
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themselves

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Segmentation
Target
market

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Chapter 9 – Market Forecasting Market Forecast

• Every business has to figure out how it is going to

• Market Forecasting
• Validating Market & Demand Potential
• Methods to evaluating market
invest its limited resources.
• Product managers manage the investments made in
products, and therefore need to derive forecasts and
deliver the expected returns.

Are whether the tasks of forecasting

difficult?
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Forecasting Basics Forecasting Basics

Product managers are typically responsible for the
following:
1. Determining the total size of a desired market, which
is called the total addressable market (TAM);
2. Deciding what portion of that market the product can
penetrate, or the attainable market share (AMS);
3. Figuring out the number of units or the volume that
the sales team can commit to sell;
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4. Calculating the number of units of tangible product
that can be produced (which is called demand
planning);
5. Determining realistic pricing for the product and how
that pricing will vary over time;
6. Translating the sales and demand forecast into a
realistic budget for the product.
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Validating Market and Demand Potential

What kind of data is needed to clarify market potentials
• Use a statistical model that takes some percentage of a
Forecasting segment’s size and allocates the market share estimates
Basics across the segment
• Consider past unit sales volumes as a way to evaluate
market potential
• Examine distribution channel performance, which
can be helpful, assuming that you are able to track
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product sales through each channel 16
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General methods to evaluate

Validating Market and Demand Potential
What kind of data is needed to clarify market potentials
• Consider a variety of analyst perspectives, based on
research reports, to determine how to characterize
market potential.
• Use general governmental resources or industry
associations
• Determine the level of competitive intensity (the
strength of competitors) in a market area
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market potential
There are two general methods
• Top – down forecasting: start with a population as a whole,
and then drill down or keep segmenting until you reach the
customer demand
• Bottom – up forecasting: start with a single customer and try
to determine the customer’s demand from the customer’s
perspective.
Both methods will be selected that depends on the availability
of adequate market segment information. Bottom-up forecasting
requires a significant amount of customer data.
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Case study “The Better Life
Company”, p.202
1. Why did Better Life offer these
specific products?
2. Why did Better Life believe these
product lines to be successful?
3. What do you recommend to Better
Life to create more new products for
these target market segments in the
future?
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Summary
• Market are segmented geographically, demographically, behaviourally
and psychologically;
• PM tailors the marketing mix to specific market segments or
target customer types;
• PM is responsible for forecasting basics, such as TAM, AMS and so
on;
• PM forecasts for existing and new products;
• PM use various kinds of data to forecast;
• There are TWO general method to evaluate market potential: Top –
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down forecasting and Bottom – up forecasting

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