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Evaluation of Market Segments(Part 3 of 3)
Evaluation of Market Segments(Part 3 of 3)
Methods to Estimate the Market &Company Sales Potential (Macro Analysis)
Top down approach
Bottom up approach
Assumptions in Selecting a Target Market (Micro)
Customers wants differ enough to warrantmarket segmentation (response elasticity)
Analysis of competition & costs indicate the firmhas resources and skills to compete effectively.
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Sales
Potential
Sales
Forecast
Sales
Level
25
15
1
Level
Planned
0 3 6
Maximum
Resources
Mktg Effort
(000)
Sales Potential--Sales Estimation:
Evaluation of Market SegmentsEvaluation of Market Segments
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Types of Sales ForecastingTypes of Sales Forecasting
TYPES OF
SALES
FORECASTS
Executive
JudgementMarket
TestsSurveys
Correlation
and Regression
AnalysisTime Series
Analysis
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Sales Forecasts MethodsSales Forecasts Methods
Sales Forecast The amount of a product a company expects to sell
during a specific period at a specified level of marketing
activities Common Forecasting Techniques
Executive judgment Based on the intuition of the firms managers
Surveys Sales force forecasting survey
Customer forecasting
Expert forecasting survey
Delphi technique (panel of experts)
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Sales Forecast MethodsSales Forecast Methods
Common Forecasting Techniques (contd)
Time-series analysis
Patterns in historical data yield information foruse in trend analysis
Trend analysis
Cycle analysis
Seasonal analysis
Random factoranalysis
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Common Forecasting Techniques
Regression Analysis - Predicting sales
based on the relationship between past salesand one or more variables.
Market Tests - Making a product availablein the marketplace and measuring purchases
and consumer responses
Using Multiple Forecasting Methods - acombination of forecasting methods mayresult in greater accuracy
Sales Forecasts MethodsSales Forecasts Methods
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Market Forecasts of the ChangingPurchasing Habits of U.S. HouseholdsMarket Forecasts of the ChangingPurchasing Habits of U.S. Households
25
20
15
10
5
01970 1980 1990 2004
Year
Medical
Recreation
Food
Clothing
SOURCE: Vision for the New Millennium . . .(Atlanta: Kurt Salmon Associates,1997). Used with permission
Applied
Marketing
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USCensus,99statab (3Feb01)
Food & Income SegmentationFood & Income Segmentation
1993 1996 1999 %
Income $34,868 38,014 43,951 +26
Food $4,399 4,698 5,031 +15
- at home $2,735 2,876 2,915 +6
- out ofhome
$1,664 1,823 2,116 +27
Consumer expenditure survey
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Franchise Sales Forecasts:Franchise Sales Forecasts:
Less Dough?Less Dough?
-2
0
2
4
6
8
10
12
1st Qtr -
FY2003
2nd Qtr 3rd Qtr 4th Qtr 1st Qtr -
FY2004
2nd Qtr
Average per-store Sales
Same storesales
*Wall Street Journal
Source: WSJ, 16 Sept.03
Case example: Cannibalism
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Macro Market Forecast: The Number ofpeople per fast food restaurantMacro Market Forecast: The Number ofpeople per fast food restaurant
2000
1500
1000
500
01980 1985 1990 1995 2002
Year
Fast Food
SOURCE:. . Wall Street Journal,
8/6/2019 Ch 8 M Segment 3of3 Sales Forecast 1Aug06 n21
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Globalization & CompetitionGlobalization & Competition
Thought Leadership and
the Future of the MBAApplied
Marketing
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One percent INCREASE in US
GNP yields
0.6 percent INCREASE in the
number of business mastersawarded three years later
One percent INCREASE in thenumber of undergraduatedegrees awarded yields
0.9 percent INCREASE in thenumber of business mastersawarded two years later
One percent INCREASE in theratio of business bachelorsdegrees to total undergraduatedegrees yields
0.7 percent increase in the totalnumber of business mastersawarded
Source: Doti, J.L. & Tuggle, F. D. (July/August, 2005)
Impact of the EconomyImpact of the Economy
Thought Leadership and
the Future of the MBA
Thought Leadership and
the Future of the MBA
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Masters Degree Providers (U.S.)Masters Degree Providers (U.S.)
607
695 747
810850
0
100
200300
400
500
600
700
800
900
1,000
92 96 99 01 03Number
f
utionsawar
ing10o
morebus
inessmastersde
grees
Source: AACSB analysis of Department of Education data
Estimate
Thought Leadership and
the Future of the MBA
Estimate
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What does this mean?
To create sustainable value, schools must
Define a focal point for excellence Select feasible and effective strategies
Distinguish themselves locally
Achieve global recognition Demonstrate learning achievement
Collaborate internationally
Thought Leadership and
the Future of the MBA
Thought Leadership and
the Future of the MBA
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Regression Analysis
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Bivariate Linear Regression
A measure of linear association thatinvestigates a straight-line relationship
Y = a + FX where . . . Y is the dependent variable
X is the independent variable
a and F are two constants to beestimated
Useful in forecasting
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Y intercept
a
The point at which a regression
line intercepts the Y-axis
F
The inclination of a regression line ascompared to a base line
Rise over run
(- notation for a change in
Slope
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Y
Scatter Diagram and Eyeball Forecast160
150
140
130
120
110
100
90
80
70 80 90 100 110 120 130 140 150 160 170 180 190
X
My line
Your line
Copyright 2000 Harcourt, Inc. All rights reserved.
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130
120
110
100
90
80
80 90 100 110 120 130 140 150 160 170 180 190
X
Y
Regression Line and Slope
Copyright 2000 Harcourt, Inc. All rights reserved.
XaY F !
X(
Y(
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X
Y
160
150
140
130
120
110
100
90
80
70 80 90 100 110 120 130 140 150 160 170 180 190
Y hat or
Dealer 3
Actual Y or
Dealer 7
Y hat or Dealer 7
Actual Y or
Dealer 3
Least-Squares Regression Line
Copyright 2000 Harcourt, Inc. All rights reserved.
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130
120
110
100
90
80
80 90 100 110 120 130 140 150 160 170 180 190
X
Y
}}{Deviation not explained
Total deviation
Deviation explained by the regression
Y
Scatter Diagram o Explained and
Unexplained Variation
Copyright 2000 Harcourt, Inc. All rights reserved.