CHAPTER 1

NATURE & SCOPE OF THE STUDY

1.1) DEFINING MARKET POTENTIAL

Market or sales potential must be stated for a given product or group of

product for a given area for a given period of time, usually a year.

Market potential is the total sales volume that all organization selling

during a stated time period in a specific market could expect to achieve under

ideal conditions.

A market potential indicates how much of a particular product can be said

to a particular market segment over some future period. The term potential refer

to a maximum level of sales and assumes that all the marketing plans are sound

and effecting implemented and all prospective customer with the desire and

ability to buy do so.

Analyzing market potential

The important steps in analyzing the market potential are

1. Market identification

The first step in analyzing a products market potential is to identify its

market identification requires finding out

a. Who buy the products?

b. Who uses it off?

c. Who are the prospective buyers and/or users?

2. Market motivation

The second step in analyzing market potential is to detect the reasons why

customers buy the product and the reasons why potential customers might buy it.

Market motivation studies answers the twins questions. Why do people buy and

why don’t people buy? Most explaining the buyer behavior of ultimate customers

rather than industrial users. The information from motivation studies helps not

only estimating a products market potential but also assist in deciding.

a. How best to present the products in sale talk

b. The relative effectiveness at different selling appeals

c. The appropriateness of various promotional methods

3. Analysis of market potential.

Having identified the potential buyers and their buying behavior their step

is to analyze the market potential generally market potential cannot be analyses

directly. So an analysis makes use of market factors. A market factor is a market

potential. It is a two-stepped process.

a) Select the market factors associated with the product demand

b) Eliminating those market segments that do not contain prospective buyer

at the product.

Market potential analysis is a strategic tool to identify market

opportunities and invest resources where they will have the greatest return in the

long run. Market potential analysis enables companies to:

Categorize countries as lead markets, breakout markets or emerging

markets.

Quantify market potential for a given product by country, region or

globally, now and in the future

Identify growth drivers and barriers in those markets.

Understand how to exploit growth markets by tailoring marketing; product

development and production strategies to meet customer demands and

overcome market barriers.

1.2) MARKET POTENTIAL INFLUENCERS

Many forces influence market potential, but there are two broad sets of

factors that are key: Demand Drivers and Inhibitors (Figure 1).

Figure 1. Demand drivers for product

Demand Drivers

Demand drivers are the factors that affect the size, readiness or

exploitability of markets. Three are especially important.

The first is the size and wealth of a market. This determines the number

of households, companies, government agencies and other organizations

that can actually afford to buy a product. This is not a simple calculation,

and average figures such as total population and GDP per capita offer only

a starting point. Other factors include household income distribution and

the structure of the business sector. Much of the value of market potential

analysis comes in calculating accurately the number of potential customers

there are for a given product.

The second is the utility of a product in a particular market. This varies

according to the nature of the product and the characteristics of the

market. For instance, if you are selling an English-only online service, the

number of people who speak English in a given market will determine the

value of the service. Similarly, if you are selling PCs for small businesses,

the value of the systems will depend on how easily they can be networked

and communicate internally.

The third demand driver is the supporting infrastructure for a product.

Frozen foods require refrigerators, and refrigerators require electricity, so

the demand for frozen foods is dependent on the presence of reliable,

affordable electrical power. For information and communication products,

the necessary infrastructure can include telephone lines, satellite uplinks,

and human resources such as skilled programmers, technicians and users.

The quality of infrastructure generally corresponds to national wealth, but

there are significant differences among countries at similar levels of

wealth.

Demand Inhibitors

Market potential in a given country can appear to be high, but actual

demand remains low. This is usually due to the presence of demand inhibitors that

either raise the cost or lower the utility of a product. An obvious example is a tax

or tariff, which increases the price to final customers. Quotas and other trade

barriers have the same effect. Some inhibitors such as tariffs are explicit and can

be quantified, while others are less visible and can only be identified through in

depth knowledge of a country. For example, the business model of companies,

management culture, and labor environment (e.g., lifetime employment, strong

unions) can inhibit demand.

Market Potential for Super foods Analyzed

According to a recent report from Data monitor, New York, “Super food

& Drinks: Consumer Attitudes to Nutrient Rich Products,” the “super food” food

and beverage market is expected to double by 2011. The report builds on the

momentum of several trends to point to potential growth opportunities for this

market. Some of the current trends driving this include:

• “Super food” is a concept that has been popularized in the last two years;

• Consumers are paying additional attention to diet and nutrition;

• Consumers are increasingly opting for food and drinks with additional health-

promoting benefits;

• Consumers are increasingly incorporating more fruit into their diet;

• Numerous super food-status products are enjoying buoyant sales, especially in

the United States where the concept is more widely promoted.

Market Potential for Cellulose Ethanol

The Market for Cellulose Ethanol report from US government is an in-

depth analysis of the prospects for the use of cellulose ethanol as a fuel. The

report includes a comprehensive analysis of how cellulose ethanol is produced, its

cost-effectiveness, the growth drivers promoting the use of ethanol over other

fuels, the barriers to market, and much more. The report also focuses on the steps

the government is taking to promote ethanol use, including tax incentives, funding

for research and development, funding for technology, and other measures. The

report also covers the basics of ethanol production; how ethanol differs from other

fuels and the benefits to consumers from using ethanol.

Assessment of the Market Potential of a New Product Combining Two

Diabetes

Medications, Pharmaceutical/Biotech, Brand Management

An emerging biotechnology company was considering developing a new

combination product and wanted to understand the market potential for this

venture. To determine the likely market segmentation and pricing for this product,

the client hired Campbell Alliance for assistance. The Campbell Alliance team

developed an interactive forecast model to estimate the sales of such a product,

and then produced detailed forecasts for production, revenue, and profit/loss.

Based on the results of these forecasts and the potential of the product, client

decided to proceed with production and is currently constructing a manufacturing

facility.

Market Potential for Computers and other Information Technologies

Kenneth L. Kraemer and Jason Dedrick, Center for Research on Information

Technology and Organizations, University of California, Irvine, CA 92697

May 1998, Working Paper: #ITR-149

This paper describes a methodology for estimating the market potential for

computers and other information technologies. Market potential analysis is not

market forecasting, although forecasting when the potential of a market might be

realized can be part of the analysis. At base, market potential analysis sizes

markets based upon a sequential and increasingly refined process from global or

regional to national markets and business, consumer and other segments within

national markets.

1.3) NEW-PRODUCT DEVELOPMENT

The development of original products, product improvements, product

modifications and new brands through the firm’s own R&D efforts.

Major stages in new product development are

1 Idea Generation

The systematic search for new product ideas. Major sources of new-product

ideas include internal sources and external sources such as Customers,

competitors, distributors and suppliers and others.

2 Idea screening

Screening the new-product ideas in order to spot good ideas and to drop poor

ones as soon as possible.

3 Concept Development and Testing

3.1 Product Concept

A detailed version of the new-product idea stated in meaningful consumer

terms.

3.2 Concept testing

Testing new-product concepts with a group of target consumers to find out if

the concepts have strong consumer appeal.

4 Marketing Strategy Development

Designing an initial marketing strategy for new product based on the product

concept.

5 Business analysis

A review of the sales, costs and profit projections for a new product is to find

out whether these factors satisfy the company’s objectives.

6 Product Development

Developing the product concept into a physical product in order to ensure that

the product idea can be turned into a workable product.

7 Test marketing

The stage of new product development in which the product and marketing

program are tested in more realistic market settings.

8 Commercialization

Introducing a new product into the market.

1.4) MARKETING RESEARCH

Market Research is the systematic design, collection, analysis and

reporting of data relevant to a specific marketing function facing an organization.

Marketing research is the systematic objective and exhaustive search for a

study of the facts relevant to any problem in the field of marketing .In order to

understand the needs of buyer and their behavior; we have a tool called marketing

research. It generates information for the decision markers to design and develop

suitable product and to price it properly, to produce it effectively and to distribute

it for the convenience of the buyer.

Marketing research can help marketers assess market potential and market

share; understand customer satisfaction and purchase behavior; and measure the

effectiveness of pricing, product, distribution and promotion activities.

The American Marketing Association defines marketing research as

“Marketing is the function which links the consumer, customer and public

to the marketer through information-information used to identify and define

marketing opportunities and problem; generate, refine and evaluate marketing

actions, monitor marketing performance; and improve understanding of marketing

as a process”

1.5) NEED FOR THE MARKET POTENTIAL

a. The companies’ uses marketing research to measure the market potentials,

characteristics of their markets, and their share of the markets.

b. It is used to obtain information that could help them make short range and

long range forecast.

c. It is used to evaluate new product opportunities and acceptances, and to

test the existing products relative to competitor’s product.

d. They are useful in better advertising decisions.

e. Marketing Research is a critical element that makes our marketing effort

effective.

1.6) SCOPE OF MARKET POTENTIAL

Marketing Research is used to find solution to any problem of marketing. It

anticipates a problem or can diagnose any existing problem marketing research

concern itself with any problem at marketing mix (four P’s of marketing –

Product, Price, Promotion and Place). It brings corporate research also with its

ambit. Marketing Research for the purpose of advertising and other marketing

decision generally cover the following are

Marketing Research

Advertising

Research

Product

Research

Consumer

Research

Sales

Research

Corporate

Research

1 Product Research

Product Research can be conducted regarding concept and positioning of

the product. Sales potential and sale forecasting for different products and market

trend analysis form the major activities in this research.

2 Promotion Research

Promotion Research is related to personal selling, advertising, public relation and

sales promotion research.

3 Distribution Research

This research activity includes location and design for distribution outlets,

transpiration and logistic studies, dealer’s surveys etc.

4 Price Research

It includes pricing studies about elastic ties marginal analysis, cost analysis and

perception regarding price.

The Principal task of marketing Management is to fulfill the aspiration of the

consumers like what they want; how they make the choice; or what are there

source of information and influence processes etc .In this process an organization

can identify new opportunities in the market; evaluating and monitor marketing

actions and in general, evolve better marketing program to serve the interest at

consumer. Thus market research acts as a link between the customer and the

marketer.

1.7) CONSUMER BEHAVIOUR

Consumer behavior is the study of how people buy, what they buy,

when they buy and why they buy. It blends elements from Psychology, sociology,

sociopsychology, anthropology and economics. It attempts to understand the

buyer decision-making process, both individually and in groups. It studies

characteristics of individual consumers such as demographics, psychographics

and behavioral variables in an attempt to understand people’s wants. It also tries

to assess influences on the consumer from groups such as family, friends,

reference groups and society in general.

Consumer behavior essentially refers to how and why people make the

purchase decisions they do. Marketers strive to understand this behavior so they

can better formulate appropriate marketing stimuli that will result in increased

sales and brand loyalty. There are a vast number of goods available for purchase,

but consumers tend to attribute this volume to the industrial world's massive

production capacity. Rather, the giant known as the marketing profession is

responsible for the variety of goods on the market. The science of evaluating and

influencing consumer behavior is foremost in determining which marketing

efforts will be used and when.

Marketers spend a great deal of time and money discovering what compels

consumers to make such on-the-spot purchases. Market researchers obtain some

of the best information through in-store research, and will often launch new

products only in select small venues where they expect a reasonable test of the

product's success can be executed. In this manner, they can determine whether a

product's success is likely before investing excessive company resources to

introduce that product nationally or even internationally.

INTERPRETING CONSUMER BEHAVIOR

There are two principal ways to evaluate the motivation behind consumer

purchases. These are by direction (what they want) and intensity (how much they

want it). Direction refers to what the customer wants from a product. Marketers

need to understand the principal motivation behind each type of product to

correctly target potential customers.

The other way to evaluate consumer behavior, intensity, refers to whether

a customer's interest in a product is compelling enough that they will go out and

make the purchase.

INFLUENCING CONSUMER BEHAVIOR

One of the best ways to influence consumer behavior is to give buyers an

acceptable motive. This is somewhat related to the idea of asking what type of

person would buy a certain product in evaluating consumer behavior. Consumers

want to feel they're doing something good, being a good person, eating healthy,

making contacts, keeping up appearances, or that they just deserve to be spoiled a

little bit. If marketers can convince consumers that they need a product or service

for some "legitimate" reason, customers will be more likely to make a purchase.

MOTIVATION

Motivation refers to an activated state within a person that leads to goal-directed

behavior.

It consists of the drives, urges, wishes, or desires that initiate the sequence

of events leading to a behavior.

Motivation begins with the presence of a stimulus that spurs the

recognition of a need.

Need recognition occurs when a perceived discrepancy exists between an

actual and a desired state of being

Needs, can be either innate or learned.

Needs are never fully satisfied.

Feelings and emotions (I.e., affect) accompany needs

Expressive needs involve desires by consumers to fulfill social and/or

aesthetic requirements.

Utilitarian needs involve desires by consumers to solve basic problems

(e.g. filling a car’s gas tank).

DISTRIBUTION CHANNEL

Distribution channel is defined as "all the organizations through which a

product must pass between its point of production and consumption"

Functions of a Distribution Channel

The main function of a distribution channel is to provide a link between

production and consumption. Organizations that form any particular distribution

channel perform many key functions:

Information Gathering and distributing market research and intelligence -

important for marketing planning

Promotion Developing and spreading communications about offers

Contact Finding and communicating with prospective buyers

Matching Adjusting the offer to fit a buyer's needs, including grading,

assembling and packaging

Negotiation Reaching agreement on price and other terms of the offer

Physical distribution Transporting and storing goods

Financing Acquiring and using funds to cover the costs of the distribution

channel

Risk taking Assuming some commercial risks by operating the channel (e.g.

holding stock)

Numbers of Distribution Channel Levels

Channel 1

Manufacturer Consumer

Channel 2

Channel 3

Channel 4

In the above figure, Channel 1 is called a "direct-marketing" channel,

since it has no intermediary levels. In this case the manufacturer sells directly to

customers.

The remaining channels are "indirect-marketing channels". Channel 2

contains one intermediary. In consumer markets, this is typically a retailer.

Channel 3 contains two intermediary levels - a wholesaler and a retailer. A

wholesaler typically buys and stores large quantities of several producers’ goods

and then breaks into the bulk deliveries to supply retailers with smaller quantities.

For small retailers with limited order quantities, the use of wholesalers makes

economic sense. This arrangement tends to work best where the retail channel is

fragmented - i.e. not dominated by a small number of large, powerful retailers

who have an incentive to cut out the wholesaler.

Manufacturer Retailer Consumer

Manufacturer Wholesaler Retailer Consumer

Manufacturer Wholesaler Jobber Retailer Consumer

1.8) OBJECTIVES OF THE STUDY:

To assess the market for MSD PHARMA in Nanded region and to assess

the opportunities to enter the market.

To identify the existing market players, their marketing channel and the

promotional activities they adapt.

To understand the consumer choice of buying float glasses in this market.

Finally to suggest measures based on the findings.