Developed by Cool Pictures and Multi Media Presentations

Developed by Cool Pictures and Multi. Media Presentations Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved.

Organizational Demand Analysis Composed of: • Sales forecasting. • Market potential analysis. Developed by Cool Pictures and Multi. Media Presentations Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved.

Organizational Demand Perspectives First, what is the highest possible level of market demand that may accrue to all producers in this industry in a particular time period? Second, what level of sales can be reasonably expect to be achieved, given a particular level and type of marketing effort? Developed by Cool Pictures and Multi. Media Presentations Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved.

Before Using Internet Information Assess its quality: • how it was gathered, • the size of the sample, • who provided the information, • the purpose for which the information was collected. Developed by Cool Pictures and Multi. Media Presentations Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved.

Internet Limitations ü There are no standards for the information. ü The owner has no requirement to provide an evaluation of the site’s accuracy. ü No review process. ü People can publish whatever they want. Developed by Cool Pictures and Multi. Media Presentations Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved.

Navigating 1. 2. 3. 4. Learn and evaluate the Web site’s author. Evaluate the site’s credibility. Determine how often the site is updated. Validate the information found on the site with other sites or from hardcopy sources. 5. Evaluate the accuracy. 6. Use many Internet sources. Developed by Cool Pictures and Multi. Media Presentations Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved.

The Relationship Between Potential and the Forecast The sales forecast answers the question: What level of sales do we expect next year, given a particular level and type of marketing effort? Developed by Cool Pictures and Multi. Media Presentations Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved.

Estimates of Absolute Market Potential 1. Select a statistical series that appears to be related to demand for the product. 2. For each target NAICS industry, determine the relationship of the series to the demand for the product whose potential is being estimated. 3. Forecast the statistical series and its relationship to demand for the desired time frame. 4. Determine market potential by relating demand to future values of the statistical series. Developed by Cool Pictures and Multi. Media Presentations Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved.

Important Criteria in Selecting a Statistical Series 1. Data on the series must be available. 2. Future estimates of the series should be easier to predict than product demand would be. Developed by Cool Pictures and Multi. Media Presentations Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved.

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 and gross estimates. Developed by Cool Pictures and Multi. Media Presentations Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved.

A Complete Census of the Market is Warranted When: 1. The markets are very concentrated. 2. There is direct sales contact. 3. Orders have a relatively high value. 4. The unit volume is low. Developed by Cool Pictures and Multi. Media Presentations Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved.

Providing Value From Customer Visits 1. Should be conducted by a cross-functional team and, 2. Include well-define objectives, 3. A careful selection of customers, 4. A discussion guide to structure the visit 5. A plan for reporting the results. Developed by Cool Pictures and Multi. Media Presentations Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved.

Two Primary Approaches to Sales Forecasting 1. Qualitative techniques • Rely on informed judgment and rating schemes. • Include the executive judgment method, the sales force composite method, and the Delphi method. • Effectiveness of qualitative approaches depends on the close relationships between customers and suppliers. 2. Executive Judgment • Enjoys a high level of usage. • Collective expertise, experience, and opinions are used. • Primary limitation does not systematically analyze cause-and-effect relationships. • There is no established formula for deriving estimates. Developed by Cool Pictures and Multi. Media Presentations Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved.

Delphi Application Usually applied to long-range forecasting. Well suited to: • New product forecasts. • Estimation of future events for which historical data are limited. • Situations that are not suited to quantitative analysis. Developed by Cool Pictures and Multi. Media Presentations Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved.

Summary of Qualitative Forecasting Techniques Typically, qualitative estimates will be merged with those developed quantitatively. Developed by Cool Pictures and Multi. Media Presentations Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved.

Quantitative Forecasting Offers Two Primary Methodoligists Time series techniques use historical data ordered in time to project the trend and growth rate of sales. Regression or casual analysis, uses factors that have affected sales in the past and implements them in a mathematical model. Developed by Cool Pictures and Multi. Media Presentations Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved.