Forecasting and Demand Measurement

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Forecasting and Demand Measurement

Market Demand

The total market demand for a product or service is the total volume that would
be bought by a defined consumer group in a defined geographic area in a defined
time period in a defined marketing environment under a defined level and mix of
industry marketing effort.

Measuring Market Demand

Marketers will want to estimate three different aspects of current market demand
  • Total market demand
  • Area market demand
  • Actual sales and market shares
nQ = n x q x p


Q = total market demand

n = number of buyers in the market

q = quantity purchased by an average buyer per year

p = price of an average unit

Market Build-up Method

  • Identification of all the potential buyers in every market and estimate the potential purchases.
  • Mining instruments that test the actual proportion of gold content in gold-bearing ores.
  • Price of instrument $1,000. The company wants to determine the market potential.
  • To estimate the market potential the manufacturer can consult the Standard Industrial  Classification (SIC).

Market Factor Index Method

  • Identifies market factors that correlate with market potential and combines them into weighted index.

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