Download Chapter 7: Target Markets: Segmentation and Evaluation

Chapter 4
Marketing Research
Marketing Information and Customer Insights
Managing Marketing Information
4-10
Marketing Research
Steps in the Marketing Research
Process
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Marketing Research
Defining the Problem and Research
Objectives
Exploratory research
Descriptive research
Causal research
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Marketing Research
Developing the Research
Plan
Secondary data is information that
already exists somewhere, having been
collected for another purpose.
Primary data is information collected for
the specific purpose at hand.
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Marketing Research
Gathering Secondary Data
Disadvantages
- data may not be
Advantages
Relevant
Lower cost
Obtained quickly
Accurate
Cannot collect
otherwise
Current
Impartial
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Marketing Research
Primary Data Collection
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Marketing Research
Implementing the Research Plan
• Collecting the information
• Processing the information
• Analyzing the information
Interpreting and Reporting Findings
• Interpret findings
• Draw conclusions
• Report to management
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Sales Forecasting
SALES FORECASTING
Who is affected by it?
 Ops – raw materials, support for existing products,
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warehousing, production equipment
Finance – inventory, all finance statements and
expectations, Wall Street Guidance
Marketing – mix variables drive forecast and are
effected by it, etc.
Sales force – budgets, territory sized and # of reps,
sales support, customer service
HR – hiring in Ops, Mktg, Sales, all parts of the
company,
R&D – existing product support, new product
investments ($ and direction of investment)
All budgets across the company flow from sales budget
Impact of Erroneous Sales Forecasts
Forecast
Functional area
Too high
Too low
Production
excess output, unsold
products
inadequate output to meet
customer demand
Inventory
Finance
Promotion
overstock
understocks
idle cash
cash shortage
wasted expenditures
insufficient expenditures to
cover the market
Distribution
costly, insufficient to sell
excess products
inadequate to reach market
Pricing
reductions to sell excess
products
price increases to allocate
scarce products
Sales force
too many salespeople, high
selling costs
too few salespeople, market
not covered
Customer
relations
money wasted on unneeded
activities, resulting in lower
profits
unsatisfactory due to out-ofstock products
Profits
lower unit profits since
expenses are high
lower total profits because
market not covered
Qualitative Sales Forecasting Techniques
Executive/Owner Judgment
Surveys
 Customer forecasting survey
 Sales force forecasting survey
 Expert forecasting survey
 Delphi technique (panel of experts)
Quantitative Sales Forecasting Methods
Averaging
 Simple averages
 Moving (rolling) averages
 Exponential smoothing
Time-Series Analysis
 Trend Analysis
 Cycle analysis
 Seasonal analysis
Quantitative Sales Forecasting Techniques
Regression Analysis: Predicting sales based on the
relationship between past sales and one or more variables
 Simple Regression: relationship between 1 independent

variable and 1 dependent variable (sales)
Multiple Regression: shows strength of relationships
between multiple independent variables and dependent
variable (sales)
Caution 1: no one has yet been able to create a formula
that guarantees accurate output
Caution 2: correlation does NOT equal causation
Other Sales Forecasting Techniques
Market Tests
 Making a product available in the marketplace and
measuring purchases and consumer responses
 Test full mix on limited scale
 Search for test markets that look like your
national target, but on smaller scale
Assumptive Reasoning (Chain Ratio)
Break a problem down into “knowable” parts,
then rebuild it using reasonable assumptions for
those parts
Market Share-Based Forecast
1. Determine the market size
a) Actual best; potential if actual is unknown
2. Determine the market share you will obtain
a) Excellent justification of share figure(s)
b) “We think…” is insufficient
3. Translate share into units and dollars
Market share is after-the-fact calculation;
measures success of marketing plan and
execution
Business Plan Sales Forecasting
Exhibit #2: Market Quantification
Year
Tot Mkt
Potential (#
Customers)*
Mkt Growth Market
Projection** Share***
Product
Annual Unit
Sales
Unit Price or
Annual $ Revenue
Weighted ASP
Year 1
Year 2
Year 3
Year 4
Year 5
* How did you determine your market potential? Identify key sources and assumptions
** Actual market or market potential. How did you determine the growth projection(s)? Identify key sources and assumptions
*** How did you determine your market share? Indicate key sources and assumptions
**** How did you determine your unit forecast? Indicate key sources and assumptions