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IMPORTANCE
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IMPORTANCE
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8/11/12
Market demand for a product is the total volume that would be bought by a defined customer group in a defined geographical area in a defined time period, in a defined marketing environment under a defined marketing programme Philip kotler.
Market Demand = Total Demand of all firms in a particular time period Company potential= maximum number of unit sold by the
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APPROACHES TO MEASURE SALES POTENTIAL Break-Down approach General economic forecast for a specific time period
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Build-up approach
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Estimate how much product a potential buyer in specific geographic area (ST) will purchase in a given period.
Multiply the unit or amount into total number of potential buyers present in that area.
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MP= nqp
Q= market Potential n= number of buyers in the specific product q= quantity purchase by the an average buyer p= price of an average unit
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Avoid over production Determine appropriate price policy Short term financial requirement Setting sales target
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5 years
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New unit planning or expansion of existing unit Long term financial requirements Planning for man power requirement under the long term demand
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Merits suitable for industrial products Help in new product development Demerits Expensive
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Merits
First hand Accurate data & simple method
Demerits
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Executive Judgment / Jury of Executive Opinion Method Executives of different department take part Involves combining and averaging sales data If accurate update data is present then this approach can work
Merits Forecast can be made quickly and economically Demerits Subjective and hence forecast lack of 8/11/12 scientific validity
Delphi Method
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Cycle comprises sales movement Trend past sales record Erratic events includes the major disaster that is unpredictable (need to be removed)
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Total response of potential customer to the marketing mix Testing of actual sales made not target sales
Merit Useful when surveyor buyer method is costly Help for new product forecasting Help in testing of elasticity of 8/11/12
Correlation method
Method based on historical data When there is close relation between sales volume & economic condition
Evolutionary approach Substitute approach Market testing approach The potential consumer approach
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