MARKET ANALYSIS

MEASUREMENT OF MARKET DEMAND

Potential Market The set of consumers who profess a sufficient level of interest in market offer.
Available Market The set of consumers who have interest, income, and access to a particular offer.

MEASUREMENT OF MARKET DEMAND

Target Market It is the part of the qualified available market the company decides to pursue.
Penetrated Market The set of consumers who are buying the companys product.

Index Number
A ratio or number that indicates the potential of a particular market; generally, a percentage above or below the national average. The measure of difference, usually expressed as a percent, between one variable of a specific kind to another variable of the same kind, i.e., a number indicating the relationship between a particular factor and a base (which has a value of 100). For marketing use, the ratio helps to show a markets potential.

BDI & CDI

Brand Development Index (BDI) relates the percent of a brand's sales in a market to the percent of the population in that same market.

Category Development Index (CDI) relates the percent of a category's sales in a market to the percent of the population in that same market.

Market Concentration Herfindahl Index

The degree to which a relatively small number of firms accounts for a large proportion of the market. This is also known as the concentration ratio. It is usually calculated for the largest three or four firms in a market

A market concentration metric derived by adding the squares of the individual market shares of all the players in a market. As a sum of squares, this index tends to rise in markets dominated by large players.

Penetration
The proportion of people in the target who bought (at least once in the period) a specific brand or a category of goods.
Market Penetration (%) = Customers Who Have Purchased a Product in the Category (#) / Total Population (#) Similarly Brand Penetration , Category Penetration, Retail Penetration

Market Share = Penetration Share * Share of Requirements * Heavy Usage Index

Penetration Share (%) = Brand Penetration (%) / Market Penetration (%)

Share of Requirements
A given brands share of purchases in its category, measured solely among customers who have already purchased that brand. Also known as Share of Wallet. Share of Requirements (%)= Brand Purchases / Total Category Purchases by Brand Buyers The best way to think about share of requirements is as the average market share enjoyed by a product among the customers who buy it.

Heavy Usage Index

The heavy usage index is a measure of the relative intensity of consumption. It indicates how heavily the customers for a given brand use the product category to which that brand belongs, compared with the average customer for that category. Heavy Usage Index (I) = Avg Total Purchases in Category by Brand Customers (#,$) / Avg Total Purchases in Category by All Customers for That Category (#,$)

DEMAND MEASUREMENT

DEMAND MEASUREMENT

Why is forecasting measurement important?

and

demand

Undertaking market research to identify market opportunities. Sales forecasts are based on estimates of demand.

VOCABULARY FOR DEMAND MESUREMENT

Market Demand Market demand for a product is a total volume bought by defined customer group fn: { customer, area, time, environment, marketing strategy}

VOCABULARY FOR DEMAND MEASUREMENT

Market Forecast Only one level of industry marketing expenditure will occur.
Market Potential It is the limit approached by market demand as industry marketing expenditure approach infinity for an environment.

VOCABULARY FOR DEMAND MEASUREMENT

Company Demand Companys estimated share of market demand at alternative levels in a given time period.

VOCABULARY FOR DEMAND MEASUREMENT

Company Sales Forecast Is the expected level of company sales based on chosen marketing plan an assumed marketing environment.

VOCABULARY FOR DEMAND MEASUREMENT

Company Sales Potential Is the sales limit approached by company demand as company marketing offer increases to that of competitors

ESTIMATING CURRENT DEMAND

Total Market Potential The total market potential is the maximum amount of sales that might be available to all the firms in an industry during a given period.

ESTIMATING CURRENT DEMAND

Area Market Potential 1. Market Build up Method 2. Multiple Factor Index Method

ESTIMATING MARKET DEMAND

Area Market Demand

1. Market Build Up Method This method calls for identifying all potential buyers in each market and estimating their potential purchases

ESTIMATING MARKET DEMAND

2. Multiple Factor Index Method The method most commonly used in consumer market is a straight forward index method.