Wk 2 – April 29

 Estimating the potential size of the market

for the product proposed to be
manufactured and get an idea about the
market share that is likely to be captured
 understanding how much consumer
demand exists for a product or service.
 Helps management determine if they can
successfully enter a market and generate
enough profits to advance their business
operations.
 Situational analysis and specification of
objectives
 Collection of secondary information
 Conduct of market survey
 Characterization of the Market
 Demand Forecasting
 Formulation of the Market Plan
 Market identification
 Business cycle
 Product niche
 Growth Potential
 Competition
 Define and identify the specific market to
target with new products or services.
 Market surveys or consumer feedback to
determine their satisfaction with current
products and services.
 Comments indicating dissatisfaction will
lead businesses to develop new products
or services to meet this consumer demand.
 Current product line vs business expansion
possibilities.
Assessment what stage of the business cycle the
market is in.

 Three stages exist in the business cycle:

 Emerging - indicate higher consumer demand
and low supply of current products or services
 Plateau - the break-even level of the market,
where the supply of goods meets current
market demand
 Declining - indicate lagging consumer demand
for the goods or services supplied by
businesses.
 Development of product that meets a specific
niche in the market.
 Products must be differentiated from others in
the market so they meet a specific need of
consumer demand
 Conducting tests in sample markets to determine
which of their potential product styles is most
preferred by consumers.
 Develop of goods and services so that
competitors cannot easily duplicate their
product.
 Products or goods specialization can create a sense
of usefulness, which will increase demand.
 Examples of specialized products are iPods or
iPhones, which entered the personal electronics
market and increased demand through their
perceived usefulness by consumers.
 Type of demand which quickly increases the
demand for current markets, allowing companies
to increase profits through new consumer demand
 Factor of market analysis which determine the number of
competitors and their current market share.
 Markets in the emerging stage of the business cycle
tend to have fewer competitors, meaning a higher
profit margin may be earned by companies.
 Once a market becomes saturated with competing
companies and products, fewer profits are achieved
and companies will begin to lose money.
 As markets enter the declining business cycle,
companies will conduct a new market analysis to find
more profitable markets
 An attempt made to estimate future
demand.
 Categories of Demand Forecasting
 Qualitative Methods
 Time series projection Methods
 Causal Methods
 Jury of executive opinion Method
 Chain ratio Method
 Consumption level Method
Demand forecasts are subject to error and
uncertainty which from three principal
source:
1. Data about past and present market.

2. Method of forecasting

3. Environmental Change
 The analysis of past and present
markets serves as the springboard for
the projection exercise
 Lack of Standardization

 Few observations

 Influence of abnormal factors

 Methods used for demand forecasting
are characterized by the following
limitations:
 Inability to handle unquantifiable factors
 Unrealistic assumptions
 Exercise data requirement
 Technological Change
 Shift in Government Policy
 Development on the International
Scene
 Discovery of New Sources of Raw
Material
 Predictability of the Weather
THANK YOU