market analysis1

8/3/2019 Market Analysis1

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MARKETANALYSIS


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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.


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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 thecompanys product.


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Index NumberA 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 onevariable of a specific kind to another variable of the same kind, i.e., anumber 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.


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BDI & CDI Brand Development Index (BDI) relates the percent of a

brand's sales in a market to the percent of the populationin that same market.

Category Development Index (CDI) relates the percent ofa category's sales in a market to the percent of the

population in that same market.


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Market ConcentrationHerfindahl IndexThe degree to which a relatively small number of firmsaccounts for a large proportion of the market. This is alsoknown 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 ina market. As a sum of squares, this index tends to rise inmarkets dominated by large players.


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PenetrationThe proportion of people in the target who bought (at leastonce 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, RetailPenetration


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Market Share = Penetration Share * Share ofRequirements * Heavy Usage IndexPenetration Share (%) = Brand Penetration (%)/ Market Penetration (%)


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Share of RequirementsA given brands share of purchases in its category, measuredsolely among customers who have already purchased thatbrand. Also known as Share of Wallet.

Share of Requirements (%)= Brand Purchases /Total Category Purchases by Brand BuyersThe best way to think about share of requirements is as theaverage market share enjoyed by a product among thecustomers who buy it.


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Heavy Usage IndexThe heavy usage index is a measure of the relativeintensity of consumption. It indicates how heavily thecustomers for a given brand use the product category to

which that brand belongs, compared with the averagecustomer for that category.Heavy Usage Index (I) =Avg Total Purchases in Category by Brand Customers (#,$)/Avg Total Purchases in Category by All Customers for ThatCategory (#,$)


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DEMANDMEASUREMENT


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DEMAND MEASUREMENT

Why is forecasting and demandmeasurement important?

Undertaking market research to identifymarket opportunities. Sales forecasts arebased on estimates of demand.


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VOCABULARY FOR DEMAND

MESUREMENT

Market Demand

Market demand for a product is a total

volume bought by defined customer groupfn: { customer, area, time, environment,

marketing strategy}


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MEASUREMENT

Market Forecast

Only one level of industry marketing

expenditure will occur.

Market Potential

It is the limit approached by marketdemand as industry marketing expenditureapproach infinity for an environment.


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MEASUREMENT

Company Demand

Companys estimated share of marketdemand at alternative levels in a given timeperiod.


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MEASUREMENT

Company Sales Forecast

Is the expected level of company salesbased on chosen marketing plan anassumed marketing environment.


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MEASUREMENT

Company Sales Potential

Is the sales limit approached by companydemand as company marketing offerincreases to that of competitors


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ESTIMATING CURRENT DEMAND

Total Market Potential

The total market potential is the maximumamount of sales that might be available toall the firms in an industry during a givenperiod.


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Area Market Potential

1. Market Build up Method

2. Multiple Factor Index Method

ESTIMATING CURRENT DEMAND


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ESTIMATING MARKET DEMAND

Area Market Demand

1. Market Build Up MethodThis method calls for identifying allpotential buyers in each market and

estimating their potential purchases


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ESTIMATING MARKET DEMAND

2. Multiple Factor Index Method

The method most commonly used inconsumer market is a straight forwardindex method.

market analysis1

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