Chapter Six

Organizational
Demand
Analysis

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 Organizational Demand Analysis

Composed of:

• Sales forecasting

• Market potential analysis.

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 • Estimating market potential and forecasting sales are the two most
significant dimension of company’s demand analysis.

• Knowledge of market potential enables the marketer to isolate the market

opportunity and allocate marketing resources to product and customer
segments that offer the highest returns.

• The sales forecast – the firms best estimate of expected sales with a
particular marketing plan, enables a Marketing Manager to review the
various strategies before allocating resources.

• The two main methods of estimating market potential are:

- Statistical series methods

- Market surveys

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 Organizational Demand
Perspectives
First, what is highest possible level of market
demand that may accrue to all producers in
industry in particular time period?

Second, what level of sales can the firm

reasonably expect to achieve, given particular
level and type of marketing effort?

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 Secondary Data – Internet
• Internet has all types marketing intelligence.

• Information easy to locate

• Internet information more current than “hard”

data sources

• Inexpensive, quick access, easy to use

• Can be used for primary data collection

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 Before Using Internet Information
Assess quality:

• How was it gathered?

• Sample size?

• Who provided information?

• Original purpose for which information was

collected?

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 Internet Market Research Limitations
 No standards for information

 Owner has no requirement to provide account of site’s

accuracy.

 No review process

 People can publish whatever they want—opinion

enters in.

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 Relationship Between Potential and Forecast

Sales forecast answers the question:

What level of sales do we expect next year, given particular

level and type of marketing effort?
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 A Complete Market Census
is Warranted When:

 Markets very concentrated

 Direct sales contact
 Orders have relatively high value
 Unit volume low

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 Qualitative Approaches
to Sales Forecasting
Qualitative techniques
• Rely on informed judgment and rating schemes.
- Executive judgment method,
- Sales force composite method,
- Delphi method.
Effectiveness of qualitative approaches depends on close
relationships between customers and suppliers.

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 Qualitative Approaches
to Sales Forecasting
Executive Judgment
• Enjoys high level of usage.
• Collective expertise, experience, and
opinions
• Primary limitation: does not
systematically analyze cause-and-effect
relationships.
• No established formula for deriving
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estimates.
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 Delphi Application

Usually applied to long-range forecasting.

Well suited to:
• Forecasting for new products
• Estimating for future events when
historical data are limited.
• Analyzing situations not appropriate for
quantitative analysis.

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 Quantitative Forecasting Offers Two
Primary Methodoligies
1. 0 Time series techniques use historical data ordered in time
project trends and sales growth rates.

2.0 Causal analysis uses factors that have affected sales in

the past and seeks relationships in mathematical models.

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 Summary of Qualitative Forecasting Techniques

Typically, qualitative estimates merged with quantitative

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 • The essence of sound forecasting is to combine
effectively the forecasts provided by various
methods.

• The process of sales forecasting is challenging

and requires understanding of the available
alternatives.

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