Market and Demand Analysis 2003

8/9/2019 Market and Demand Analysis 2003

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Market and Demand AnalysisMarket and Demand Analysis


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Demand Analysis Of ProductDemand Analysis Of Product

The success of any project depends on thedemand for the output produced by it.

Catering an unfulfilled need should the

ultimate objective of commercialprojects, if they should succeed .the

Identifying the need , or the potential

demand for the product is the main issue

involved.


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Market and Demand Analysis is concerned

with two broad issues:-

What is the likely aggregate demand for the

product / services?

What share of the market will the proposed

project enjoy?


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Steps involved in demand andSteps involved in demand and

market analysismarket analysis

1) Situational analysis and specification of

objectives

2) Collection of secondary information

3) Conduct of market survey

4) Characterisation of the market

5) Demand forecasting

6) Uncertainties in demand forecasting

7) Market planning


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5

Collectionof

SecondaryInformatio

n

SituationalAnalysis

andSpecificati

on ofObjectives

Conduct ofMarketSurvey

Characterisation of theMarket

DemandForecasti

ng

MarketPlanning

Key Steps in Market and Demand Analysis and their Inter-relationships


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1) Situational analysis and specification1) Situational analysis and specification

of objectivesof objectives

In order to get a feel of the relationship between

the product and its market, the project analyst may

informally talk to customers, competitors,

middlemen, and others in the industry. Wherever

possible, he may look at the experience of the

company to learn about the preferences and

purchasing power of customers, actions and

strategies of competitors, and practices of themiddlemen .


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If situational analysis generates enough and reliable

data to measure the market and projected demand,

a formal study need not be carried out.

For eg:- a small but technologically competent

firm has developed an improved air cooler

based on new principle that offers various

advantages.


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2)2) Collection of secondary information

Secondary information is information that has

been gathered in some other context and is

already available.

Secondary information provides the base and

the starting point for the market and demand

analysis.It indicates what is known and oftenprovides leads and cues for gathering primary

information required for further analysis.


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General sources of secondaryGeneral sources of secondary

informationinformation

Census of India:- provides information on

population, demographic characteristics etc.

Economic survey:-provides information on

industrial production ,wholesale prices, exports,national income, agricultural production etc.

Plan reports:-provides a wealth of information

on plan proposals, physical and financial

targets(five-year plans)Stock exchange directory:-provides ten-year

picture of performance & financial statements

for all listed cos.


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3)Conduct of market survey3)Conduct of market survey

Secondary information, though useful, often

does not provide a comprehensive basis for

market and demand analysis. It needs to be

supplemented with primary information

gathered through a market survey.

The market survey may be a census survey or a

sample survey; typically it is the latter


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Information Sought in a Market SurveyInformation Sought in a Market Survey

Demand and rate of growth of demand

Demand in different segments of the market

Motives for buying

Purchasing plans and intentions Satisfaction with existing products

Unsatisfied needs

Attitudes toward various products

Distributive trade practices and preferences

Socio-economic characteristics of buyers


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Steps in a Sample SurveySteps in a Sample Survey

1. Define the target population.

2. Select the sampling scheme and sample size.

3. Develop the questionnaire.

4. Recruit and train the field investigators.

5. Obtain information as per the questionnaire

from the sample of respondents.

6. Scrutinise the information gathered.

7. Analyse and interpret the information


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4)4) Characterisation of the MarketCharacterisation of the Market

Based on the information gathered from secondarysources and through the market survey, the market

for the product/service may be described as:-

Effective demand in the past and presentBreakdown of demand

Price

Methods of distribution & sales promotion

Consumers

Supply & competition

Government policy


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1)Effective demand in the past & present1)Effective demand in the past & present

Its defined as :-

Production +imports-exports-changes in

stock level

2) Breakdown of demand:- total demand maybe broken down into demand for different

segments of market.

Nature of product

Consumer groups


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3) Price :- Manufacturers price quoted as cost,insurance & freight ;average wholesale price;

average retail price.4) Methods of distribution & sales promotion:-

5) Consumers :-

age,income,profession,residence,preferences

habits, attitude.

6) Supply and competition :-

7 ) Government policy


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55) Demand forecasting) Demand forecasting

I Qualitative Methods : These methods relyessentially on the judgment of experts to translatequalitative information into quantitativeestimates.

The important qualitative methods are :

Jury of executive method

Delphi method

II Time Series Projection Methods : These

methods generate forecasts on the basis of ananalysis of the historical time series . Theimportant time series projection methods are :

Trend projection method

Moving average method


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Jury of Executive Opinion Method

This method involves soliciting the opinion of a group ofmanagers on expected future sales and combining them

into a sales estimate

Pros

It is an expeditious method

It permits a wide range of factors to beconsidered

It appeals to managers

Cons

Its reliability is questionable


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Delphi MethodDelphi Method

This method is used for eliciting the opinions of a

group of experts with the help of a mail survey.The steps involved in this method are :

1. A group of experts is sent a questionnaire bymail and asked to express their views.

2. The responses received from the experts aresummarised without disclosing the identity of theexperts, and sent back to the experts, along with aquestionnaire meant to probe further the reasons

for extreme views expressed in the first round.3. The process may be continued for one or morerounds till a reasonable agreement emerges in theview of the experts.


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Pros

It is intelligible to users

It seems to be more accurate and less expensivethan the traditional face-to-face group meetings

Cons

There are some question marks: What is the

value of the expert opinion? What is the

contribution of additional rounds and feedback to

accuracy?


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Trend Projection Method

The trend projection method involves (a)determining the

trend of consumption by analyzing past consumption

statistics and

(b) projecting future consumption by extrapolating the trend.

Linear relationship : Yc = a + bx

Yc = Trend Value X = Unit of Time

a = Constant Value b = Slope of the Trend

N = Number of Years

y = Na + b X XY = a X + b X2


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Moving Average MethodMoving Average Method

As per the moving average method of salesforecasting, the forecast for the next period is

equal to the average of the sales for several

preceding periods.

In symbols,

where Ft+1 = forecast for the next periodS

t= sales for the current period

n = period over which averaging is done


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6) Uncertainties in Demand Forecasting6) Uncertainties in Demand Forecasting

Demand forecasts are subject to error & uncertaintywhich arise from three principal sources.

Data about past and present market. Methods of forecasting.

Environmental change.


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1. Data about past & present markets :-

b) Lack of standardisation

c) Few observationd) Influence of abnormal factors

2. Methods of forecasting

a) Unrealistic assumptions

b) Excessive data requirement

3. Environmental changes

a) Technological changes

b) Shift in government policy

c) monsoon


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7) Market Planning7) Market Planning

A marketing plan usually has the followingcomponents:

Current marketing situation

Opportunity and issue analysis

Objectives

Marketing strategy


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Market and Demand Analysis 2003

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Transcript of Market and Demand Analysis 2003