Today

• Project update

• Market demand forecasting

• Segmentation

• Case studies

Market Forecasting

• Demand / size of market/ consumption/ market forecast.. How big is the market demand ?

• NOT demand for your brand

Estimating Market Demand

Historical DataHistorical Data

Local Production Plus ImportsLocal Production Plus Imports

Expert OpinionExpert Opinion

Irwin/McGraw-Hill

AnalogyAnalogy

8-10

Market Forecast

• Data & judgement• Ultimately try to quantify• Current size & forecast• Per capita consumption best basis• Volume= per capita x population• Market value = volume x average price• Usually market forecast is in volume

Market Forecast- historical data

• Last 5 years, on average 100k new cars bought in Austria p.a

• UK consumers eat 15 kg of chicken p.a.

• US consumers bought 900k espresso machines in 2002

Market forecast- analogy

• Demand is proportional to some factor (eg. GDP for consumer durables)

• Demand for office air conditioning follows development of fax machines

• US and Japan GDP / capita same but car penetration 800 / 1000 households in US versus 550 in Japan.. Why ?

• Careful of using single factors in forecast

Market forecast- analogy

• US and Japan GDP / capita same but car penetration 800 / 1000 households in US versus 550 in Japan.. Why ?

• Careful of using single factors in forecast

Factors influencing Market demand

• Income ( GDP )• Relative price .. Price of category versus

prices in substitute cagegory• Advertising expenditure in this market ( total

compared to other categories)• Culture• Availability ( distribution)• Other eg. climate

Market Forecast –Soft drinks

• Income

• Price

• Relative price v. other beverages

• Availability

• Climate

• Advertising expenditure in total market

• Cultural factors ( water, wine , beer !)

Market Forecasting

• Ready to eat breakfast cereals in China

• Frozen vegetables in Brasil

• Cider in Austria

Market outlook

Market attractiveness model

Competitive intensity outlook

Company capability

Attractiveness

Segment profitability

Market segmentation- why ?

• Companies divide large heterogeneous markets into smaller segments that can be reached more efficiently with products & services that match consumers needs.

• Consumers have different needs, perceptions, behaviour- suppliers should seek to meet these to deliver improved consumer satisfaction

• Companies can develop & manage the marketing mix more efficiently

• Commodities not segmented, all other markets can be segmented!

Demographic

Psychographic

Behaviouristic

Geographic

BASES FOR

SEGMENTING

MARKETS

Market segmentation

• Geographic segmentation.

– Very common method

– Based upon language / cultural/climate

– Eg. Foods, air conditioning, magazines

– Urban / rural markets

• Companies very often organised on national bases

Market segmentation- Demographic

• Age- toys,vitamins, comics

• Life cycle-18-30, Saga,cruises,

• Gender- clothes, cosmetics, magazines

• Income- luxury brands, economy brands

• Social class- Butlins, Center Parcs

• Occupation- business magazines

Market segmentation- Psychographic

• Lifestyle eg Y&R• Personality eg Honda scooters aimed at

young at heart• Hobbies- golfing , scateboarding, gliding,

chess• Nestle – energetic males & depressive

chocolate lovers

Mindset types as a basis for consumer segmentation-Nokia

GEODEMOGRAPHICSA combination of geographic, demographic and lifestyle information that identifies target market locations by several behavioural similarities

Market segmentation-behaviorial

• Divides market into groups based upon their knowledge, attitudes or responses to a product

• Occasions- when buying or using

• FJ promoted outside breakfast usage

• Mothers Day for cards , flowers

• Benefit- find the benefits that consumers are looking for eg.toothpaste

• Usage rate- heavy , light buyers eg beer, frequent flyers

Segmentation- Segments V Niche

• Segment bigger

• Segments have several competitors

• SUV is a segment; Land Rover, Suzuki, Shogun all other products in this segment

Segmentation- TCCC

• Mass- Coca- Cola

• Product variety- Fanta, Sprite

• Target marketing– Diet Coke

– Cherry Coke

– Caffeine free

– Lemon coke

– Glass / PET / Dispensed/Cans

Manner brands / product categories

Brand CategoryManner WafersNapoli DrageesCasali Rum KokosCasali Schoko BananenVictor Schmidt MozartkugelHeller Pralines