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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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VOCABULARY FOR DEMAND
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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VOCABULARY FOR DEMAND
MEASUREMENT
Company Demand
Companys estimated share of marketdemand at alternative levels in a given timeperiod.
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VOCABULARY FOR DEMAND
MEASUREMENT
Company Sales Forecast
Is the expected level of company salesbased on chosen marketing plan anassumed marketing environment.
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VOCABULARY FOR DEMAND
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.