Sales Forecasting and Market Research

Advanced Marketing BiMBA 2006

Forecasted Sales reflect

1. The size of the target market 2. The marketing mix chosen for the target market 3. The assumed number of competitors and competitive intensity in the target market
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Sales Forecasting
Key Terms in Forecasting Market Potencial Market Target Market Market Penetration Market Potencial

Market Potencial

Tjere ate three aspects of market potencial Market Enviornment Market expenditure by industry Market Demand

Some more terms

Market Forcasts Company Demand Company forecasts

SALES FORECASTING
Sales forecast Estimate of a firms revenue for a specified time period.

QUALITATIVE FORECASTING TECHNIQUES Jury of Executive Opinion

Combines and averages the outlooks of top executives from such areas as marketing, finance, production, and purchasing.

Delphi Technique
Solicits opinions from several people, but it also gathers input from experts outside the firm rather than relying completely on company executives.

Sales Force Composite Develops forecasts based on the belief that organization members closest to the marketplace offer the best insights concerning short-term future sales. Typically works from the bottom up. Survey of Buyer Intentions Gathers input through mail-in questionnaires, online feedback, telephone polls, and personal interviews to determine the purchasing intentions of a representative group of present and potential customers.

QUANTITATIVE FORECASTING TECHNIQUES

Test Markets Gauges consumer responses to a new product under actual marketplace conditions.

Allows researchers to evaluate the effects of different prices, alternative promotional strategies, and other marketing mix variations.

Trend Analysis
Develops forecasts for future sales by analyzing the historical relationship between sales and time. Exponential Smoothing Sophisticated method of trend analysis that weighs each years sales data, giving greater weight to results from the most recent years.

Market Potencial Estimation Y = n x ux p

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Making a Sales Forecast

Sales Forecast is a function of: Market potential (M) Proportion of market you are Targeting (T) Extent of market Coverage (C) Number of Units expected to sell per customer during the year (U)

Average Price per unit (P)

Sales Forecast = M x T x C x U x P

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 Marketing

research Process of collecting and using information for marketing decision making. Marketers use data from a variety of sources to understand customers, target customer segments, and develop long-term customer relationships.

Research is the primary source of information used to make effective marketing decisions.

WHO CONDUCTS MARKETING RESEARCH? Size and form of research often tied to corporate structure. Many firms outsource research needs. Major U.S. marketing research firms include ACNielsen and Arbitron. Syndicated Services Organizations that regularly provide a standardized set of data to all customers.

THE MARKETING RESEARCH PROCESS

Usually follows a six-step process.

DEFINE THE PROBLEM

Well-defined problems are half-solve

Avoid confusing symptoms with problem itelf. Loss of market share is a symptom; reason for the loss is the problem. Evaluate firms marketing mix and possible changes to the marketing environment.

CONDUCT EXPLORATORY RESEARCH

Exploratory

research Process of

discussing a marketing problem with informed sources both within and outside the firm and examining information from secondary sources.

Using Internal Data

Research from customer surveys and demographic data. Sales analysis can compare expected sales with actual sales and be analyzed in a variety of ways, such as by customer type, sales method, and others. Accounting data provides information about financial issues. Marketing cost analysis evaluates expenses for a variety of costs.

FORMULATE A HYPOTHESIS A tentative explanation for some specific event. Sets the stage for more in-depth research.

CREATE A RESEARCH DESIGN

A master plan or model for conducting research. Must ensure it will measure what researchers intend to measure.

COLLECT DATA Secondary data Previously published information.

Primary data Information collected specifically for the investigation at hand. Primary costs more to gather but can be much more valuable.

INTERPRET

AND PRESENT RESEARCH INFORMATION Present in a format that allows managers to make effective judgments. Researchers and end users must collaborate to ensure effectiveness of research. Reports must be clear and concise. Must explain technical terminology.

MARKETING RESEARCH METHODS

SECONDARY DATA COLLECTION

Secondary data comes from many sources.

Can be internal data or external data. Government Data CSO Economic Survey Finance minostry

Private Data

Variety of sources:
Trade associations.

Business and trade magazines.

Information gathered from scanning technology. Increasing use of radio-frequency identification for inventory control.

Online Sources of Secondary Data

Online databases.
Research aggregators acquire, catalog, reformat, segment, and resell premium research reports. Internet discussion groups, chat rooms, and newsgroups.

SAMPLING TECHNIQUES Sampling Process of selecting survey respondents or research participants. Populationtotal group of people a researcher wants to study. Researchers rarely sample the entire population.

Probability sample Sample that gives every member of the population a chance of being selected. Simple random sampleevery member of relevant group has equal opportunity to be sampled.

Nonprobability sample Sample that involves personal judgment somewhere in the process.

PRIMARY RESEARCH METHODS

Choice of method depends on the issues under study and the decisions marketers need to make.

Observation Method Researchers view the overt actions of subjects being studied. Example: Counting the number of cars that pass by a potential restaurant location. Use increasingly sophisticated ways of tracking behavior. In response to digital video recording, Nielsen Media Research has changed the way it reports television viewership.

SURVEY METHOD
Researchers must ask questions to get information on attitudes, motives, and opinions.

Telephone Interviews
Quick and inexpensive way of getting a small quantity of relatively impersonal information. Many people refuse to take part or are reluctant to give personal information over the phone. Not a viable option in international markets where phone usage is rare.

Personal Interviews
Allow researchers to obtain detailed information and ask follow-up questions. May use mall intercepts, interviews conducted in shopping malls.

Focus Groups Focus group Simultaneous personal interview of a small group of individuals, which relies on group discussion about a certain topic. Encourage general discussion of a selected topic.

Valuable for exploratory research, such as new product development.

Drawback is potential lack of honesty due to peer pressure.

Mail Surveys Cost-effective means that allows respondents anonymity. Response rates typically lower than for personal interviews and are time-consuming. May be subject to bias through self-selection.

Fax Surveys Limited household use makes getting a good sample difficult.

Federal junk fax law limits fax transmissions for commercial purposes.
Online Surveys and Other Internet-Based Methods

Allows researchers to speed the survey process, increase sample sizes, ignore geographic boundaries, and dramatically reduce costs.
Marketers are experimenting with Web questionnaires and electronic bulletin boards. No standard has developed for measuring Web use. Some software can monitor a users viewing habits and display targeted banner ads.

Experimental Method
Least used method.

Controlled experimenta scientific investigation in which a researcher controls or manipulates a test group and compares the results with those of a control group.
Most common use is for test marketingintroducing a new product in a specific area and then observing its degree of success. Can be expensive and allow competitors to learn about new products quickly. Alternatives include computer modeling software, regional product launches, and limiting product to a single retail outlet to allow for careful evaluation.

CONDUCTING INTERNATIONAL MARKETING RESEARCH

Follow same basic steps as for domestic marketing research. U.S. Department of Commerce offers reports and guides about almost every country in the world. Export America and Overseas Business Reports. Researchers must be aware of cultural and legal environments. May have to adapt research methods to local conditions. Example: Focus groups may be difficult to organize in countries where violence and kidnapping are common.

INTERPRETIVE RESEARCH

Provides insight into consumer behaviour and the ways consumers interact with brands.

Researcher spends time studying the culture, called ethnographic research.

Focus is on understanding the meaning of the product or consumption in the consumers life. Cost is higher than other forms of research. Captures what consumers actually do, not just what they say they do.

COMPUTER TECHNOLOGY IN MARKETING RESEARCH

MARKETING INFORMATION SYSTEMS (MIS)
A planned, computer-based system designed to provide decision makers with a continuous flow of information relevant to their areas of responsibility. Well-constructed MIS is the companys nerve center because it continually monitors marketing environment and provides instantaneous information.

MARKETING DECISION SUPPORT SYSTEMS (MDSSs)

Marketing decision support system (MDSS) Marketing information system component that links a decision maker with relevant databases and analysis tools. Develops raw data into information useful for decision making.

DATA MINING
The process of searching through computerized data files to detect

patterns.
Focuses on identifying relationships that are not obvious to marketers. Efficient way to sort through huge amounts of data and make sense of it.

Example: NACCO Industries uses data mining to scan warranty claims for common problems.

BUSINESS INTELLIGENCE
Process of gathering information and analyzing it to improve business strategy, tactics, and daily operations.

COMPETITIVE INTELLIGENCE
A form of business intelligence that focuses on finding information about competitors using published sources, interviews, observations by salespeople and suppliers in the industry, and other sources.