Chapter Six Organizational Demand Analysis

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Organizational Demand Analysis

Composed of: Sales forecasting Market potential analysis.

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Organizational Demand Perspectives

First, what is highest possible level of market demand that may accrue to all producers in industry in particular time period?

Second, what level of sales can the firm reasonably expect to achieve, given particular level and type of marketing effort?

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Secondary Data Internet

Internet has all types marketing intelligence. Information easy to locate Internet information more current than hard data sources Inexpensive, quick access, easy to use Can be used for primary data collection
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Before Using Internet Information

Assess quality: How was it gathered? Sample size? Who provided information? Original purpose for which information was collected?
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Internet Market Research Limitations

 No standards for information  Owner has no requirement to provide account of sites accuracy.  No review process  People can publish whatever they wantopinion enters in.

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Relationship Between Potential and Forecast

Sales forecast answers the question: What level of sales do we expect next year, given particular level and type of marketing effort?
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Estimates of Absolute Market Potential Using Statistical Series

1. Select statistical series that appears to relate to product demand. 2. For each target NAICS industry, determine relationship of statistical series to potential demand for product. 3. Forecast statistical series and its relationship to demand for desired time frame. 4. Determine market potential by relating demand to future values of statistical series.

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Important Criteria in Selecting Statistical Series

Data on series must be available. Future estimates of series should be easier to predict than product demand itself would be.

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Estimating Market Potential Depends On:

How well the demand or usage factor represents underlying demand. The quality of the data used. The ability to estimate future values of the series and usage factors. The extent of distortion caused by using averages, gross estimates, and proxies

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A Complete Market Census is Warranted When:

    Markets very concentrated Direct sales contact Orders have relatively high value Unit volume low

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Qualitative Approaches to Sales Forecasting

Qualitative techniques Rely on informed judgment and rating schemes. Include executive judgment method, sales force composite method, and Delphi method. Effectiveness of qualitative approaches depends on close relationships between customers and suppliers. 12
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Qualitative Approaches to Sales Forecasting

Executive Judgment Enjoys high level of usage. Collective expertise, experience, and opinions Primary limitation: does not systematically analyze cause-and-effect relationships. No established formula for deriving estimates.
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Delphi Application
Usually applied to long-range forecasting. Well suited to: Forecasting for new products Estimating for future events when historical data are limited. Analyzing situations not appropriate for quantitative analysis.

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Quantitative Forecasting Offers Two Primary Methodoligies

Time series techniques use historical data ordered in time to project trends and sales growth rates.

Regression, or causal, analysis uses factors that have affected sales in the past and seeks relationships in mathematical models.

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Summary of Qualitative Forecasting Techniques

Typically, qualitative estimates merged with quantitative ones.

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