INTRODUCTION TO COMMERCIAL APPRAISAL“MARKET APPRAISAL: MARKET FORECASTING TOOLS; DEMAND/SUPPLY ANALYSIS & FORECAST; MARKETING SET-UP AND ORGANISATION”
By K. Ramkrishna, General Manager
Industrial Development Bank of India
August 25, 2004
INTRODUCTION TO COMMERCIAL APPRAISAL
MOST CELEBRATED CHIEF EXECUTIVES DURING 1980’S IN THE US CORPORATE WORLD
Bill Gates Microsoft
Bert Roberts MCI
ANALYSIS OF COMPETITIVE ADVANTAGES
WIDENING CHOICE DUE TO E-COMMERCE, BESIDES GLOBALISATION
SIMULATING, PREDICTING & MAPPING CONSUMER BEHAVIOUR
E-COMMERCE A WAY OF LIFE
*
CONSUMER WILL SEARCH FOR COMPARABLE PRICE OFFERINGS ON THE NET
AVAILABILITY OF SEARCH ENGINES THAT CAN TRACK COMPARABLY PRICED PRODUCTS IN THE CYBER SPACE
COMMODITISATION OF SERVICES & NEED FOR VALUE ADDITION
*
OPENING UP OF AGRICULTURAL & SERVICE SECTORS
INTELLUCTUAL PROPERTY RIGHTS
ANTI-DUMPING & SUBSIDY MEASURES
SPECIAL & DIFFERENTIAL TREATMENT
NEO-DARWINISM - GLOBALISE OR PERISH
GLOBALLY COMPETITIVE INDUSTRY - CRUCIAL
DECISION BY CONSENSUS - ONE MEMBER ONE VOTE
FAILURE OF SEATTLE MEET
*
*
INVESTMENT DECISIONS DRIVEN BY COMMERCIAL & GLOBAL COMPETITIVENESS CONSIDERATIONS.
*
WHAT IS MARKET APPRAISAL
FUTURE DEMAND SUPPLY SCENARIO
PRICE FOR EXAMINING VIABILITY
PRICES OF CRITICAL INPUTS
COMPETITIVENESS OF THE UNIT UNDER REVIEW AND THE INDUSTRY
MARKETING STRATEGIES
INHERENT THREATS
WHAT IS A MARKET ?
SETTLEMENTS
DEFINITION OF MARKET DEMAND
*
WHAT DO WE DO IN MARKET APPRAISAL
PRODUCT, END-USE & ITS POSITION ON THE PRODUCT LIFE CYCLE
MARKET STRUCTURE, CAPACITY, PRODUCTION, MAJOR PLAYERS
MARKETING STRATEGIES
GLOBAL SCENARIO
FUTURE SCENARIO, MARKET SIZE, PRICING & STRATEGIES
*
*
INTRODUCTION
*
(Contd.)
CHEMICAL COMPOSITION
TECHNICAL SPECIFICATION
NORMS OF CONSUMPTION OF THE PROPOSED PRODUCT IN VARIOUS END-USE APPLICATIONS
COMPLIMENTARY AND SUBSTITUTE PRODUCTS
*
TRENDS IN CAPACITY CREATION
ENVISAGED PRODUCT CHARACTERISTICS & MIX
GUARANTEED NORMS OF CONSUMPTION OF RAW MATERIALS, INPUTS, CONSUMABLES, POWER & UTILITIES
INSTALLED CAPACITIES IN GENERAL ARE NOT ADDITIVE
*
TRENDS IN CAPACITY UTILISATION
*
COMPOUND ANNUAL AVERAGE RATE OF GROWTH (CARG)
TRENDS IN DOMESTIC AND INTERNATIONAL PRICES
REASONS FOR PRICE FLUCTUATIONS
*
PRODUCT DIFFERENTIATION
MARKET SEGMENTATION
MARKET DIFFERENTIATION
PRICE DIFFERENTIATION
DIRECT & NETWORK MARKETING
PROMOTION AND ADVERTISING
MAJOR PLAYERS AND THEIR MARKETING STRATEGIES
TAKEOVERS, MERGERS, CONSOLIDATIONS, CLOSURES AND STRATEGIC ALLIANCES
*
GLOBAL SHARES IN PRODUCTION, IMPORT AND EXPORT
TARIFF AND NON-TARIFF BARRIERS
DIVERSIFICATION VS. FOCUS ON CORE COMPETENCIES
SELF SUFFICIENCY VS. COMPARATIVE ADVANTAGE
SWADESHI VS. VIDESHI
RECRUITMENT & TRAINING
TECHNOLOGY AND PROCESS
VALUE ENGINEERING
MARKETING MANAGEMENT CONSISTS OF FOUR DISTINCT AND WELL-DEFINED ACTIVITIES
1. Analysis: Of market opportunity and specifying marketing objectives.
2. Planning: Devising ways and means of achieving the marketing objectives and in particular specifying the Marketing Mix/Strategy and designing a marketing organisation.
3. Organisation: Creation of an appropriate organisational structure and assembling the necessary manpower to implement the marketing plan.
*
Money Supply, Prices and Interest Rates
Government’s Finances and Availability of Resources for Investment
Availability of Long Term Resources through FDI, Multilateral Term Lending Institutions, Foreign Aid etc.
*
Interest Rate Policy
Policy for Import of Technology
Policies for Development of Indigenous Technologies and R&D
Labour Policies
Policies for domestic joint ventures abroad
*
Competitive Environment
Cost Structure of Domestic Industry and of similar industries in other countries and likely future trends.
Comparison of technologies, types of products made and
processes employed in the country with those of other countries and expected future trends.
Availability of uptodate technologies, know-how, processes etc.
*
Product Improvement, New Product Development, Development of New Markets, Degree of Customer Orientation.
*
Formation of Trade Blocks
*
WHAT PEOPLE SAY :-
EXPERT OPINION METHOD
END USE METHOD
WHAT PEOPLE DO :-
WHAT PEOPLE HAVE DONE :-
LOG LINEAR TREND : y=A*B^t EQUIVALENT TO
LOG y = LOG A+B*LOGt
*
SEMI-LOG LINEAR TREND : y=A*t^B EQUIVALENT TO
LOGy= LOG A+t*LOGB
QUADRATIC TREND : y=A*t^2 + B*t+C
SINUSOIDAL TREND :
*
EXPONENTIAL SMOOTHING MODELS
MULTIPLE : y=A+B1*x1+B2*x2+.....Bn*xn
LOG FORM
NON-LOG FORM
y= à+sumßj*xj(j – 1..n), a linear postulate
y=fertiliser consumption in million tonnes
x1=food grain production target in million tonnes
x2=gross cropped area in million hectares
x3=gross area under irrigation in million hectares
x4=price of fertiliser per tonne
x5=gross domestic product of agricultural sector
in million rupees a lagged variable
x6=rainfall index, dummy variable
*
BEST LINEAR UNBIASED ESTIMATERS
ECONOMETRIC MODELS :-
SIMULTANEOUS EQUATION
AUTO REGRESSIVE
MARKETING STRATEGY
*
Product
Price
Place
Promotion
Product Quality, Design, Specifications
Product Prices by Markets/Customers
Product Positioning
Advertising/Sales Promotion
Distribution Network/Channels
*
MARKET SEGMENTATION
Markets are segmented in order to facilitate concentration of marketing effort in the most profitable, attractive segments of a given larger market. Segmentation prevents dissipation of marketing effort over the entire market and facilitates effective marketing of a company’s product through concentration of marketing effort in the target markets.
*
MARKETING STRATEGY (CONTD.)
MARKET SEGMENTATION (Contd.)
Market Segmentation is the process of identifying sub sets of buyers with different product requirements and different buying needs and desires.
*
PRODUCT DIFFERENTIATION
*
PRODUCT POSITIONING
*
CRITERIA FOR MARKET SEGMENTATION
Market Segmentation to be meaningful and effective should satisfy five basis principles.
- Divisibility
- Measurability
- Substantiality
- Accessibility
- Responsiveness
High
Low
Low
High
Quality
ECONOMY
PREMIUM
Price
PERCEIVED COMMERCIAL RISK
MARKET FORECASTING TOOLS,
DEMAND/SUPPLY ANALYSIS & FORECAST
FOR ANY CLARIFICATIONS,
K. RAMKRISHNA, GENERAL MANAGER
MUMBAI