Collecting Information and Forecasting Demand

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Secondary beliefs and values: more open to change, such as believing people should marry early

- Existence of Subcultures

Subcultures: groups with shared values, beliefs, preferences and behaviors emerging from their special life experiences or circumstances.

- The Natural Environment

Corporate environmentalism: recognizes the need to integrate environmental issues into the firm’s strategic plans. Trends in the nature environment for marketers to be aware of include the shortage of raw materials, especially water; the increased cost of energy; increased pollution levels; and the changing role of governments.

Finite renewable resources: oil, coal, platinum, zinc and silver

- The Technological Environment

- Consumer Environmental Segments

- Genuine Greens (15%)—most likely to think and act green

- Not Me Greens (18%)—very pro-green attitudes, but its behaviors are only moderate

- Go-with-the-Flow Greens (17%)—some green behaviors—mostly the easy ones

- Dream Greens (13%)—cares about the environment but doesn’t have the knowledge or resources to take action

- Business First Greens (23%)—environment is not a huge concern

- Mean Greens (13%)—groups claims to be knowledgeable but does not express pro-green attitudes or behaviors

- Accelerating Pace of Change

- Unlimited Opportunity for Innovation

- Varying R&D Budgets

- Increased Regulation of Technological Change

- The Political-Legal Environment

- Increase in Business Legislation

- Growth of Special-Interest Groups

Political Action Committees (PACs): lobby government officials and pressure business executives to respect the rights of consumers, women, senior citizens, minorities, and gays and lesbians.

Consumer Movement: organized citizens and government to right to know the real cost of a loan, the true cost per standard unit of competing brands (unit pricing), the basic ingredients and true benefits of a product and the nutritional quality and freshness of food

- Forecasting and Demand Measurement

- The Measures of Market Demand

Potential Market: the set of consumers with a sufficient level of interest in a market offer. However, their interest is not enough to define a market unless they also have sufficient income and access to the product.

Available Market: the set of consumers who have interest, income and access to a particular offer. The company or government may restrict sales to certain groups.

Qualified Available Market: the set of consumers who have interest, income, access and qualifications for the market offer (i.e. alcohol is for age 21+)

Target Market: the part of the qualified available market the company decides to pursue.

Penetrated Market: the set of consumers who are buying the company’s product

Ninety Types of Demand Measurement (6x5x3): Product Level (All/Industry/ Company/Product Line/Product Form/Product Item Sales) x Space Level (World/USA/ Region/Territory/Customer) x Time Level (Short/Medium/Long Run)

- A Vocabulary for Demand Measurement

- Market Demand

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 program

Market Demand Function: market demand is not a fixed number, but rather a function of the stated conditions and its dependence on underlying conditions

Market Minimum: base sales, Q1

Marketing Potential: Q2

Marketing Sensitivity of Demand: distance between the market minimum and the market potential

Expansible Market: affected in size by the level of industry marketing expenditures

Nonexpansible Market: not much affected by the level of marketing expenditures; the difference between Q1 and Q2 is relatively small.

Primary demand: organizations selling in a nonexpansible market must accept the market’s size—the level of primary demand for the product class—and direct their efforts towards winner a larger market share

Market Share: higher level of selective demand for their product

Market-Penetration Index: comparing current and potential levels of market demand; low index indicates substantial growth potential for all the firms. High index suggests it will be expensive to attract the few remaining prospects. Price competition increases and margins fall when the market-penetration index is already high.

Share-Penetration Index: comparing current and potential levels of market shares; low index indicates company can greatly expand its share. Holding it back could be low brand awareness, low availability, benefit deficiencies or high price. Firm should calculate the share-penetration increases from removing each factor, to see which investments produce the greatest improvement.

- Market Forecast

Market forecast: only one level of industry marketing expenditure will actually occur. Market demand corresponding to this level is market forecast.

- Market Potential

- Company Demand

- Company Sales Forecast

- Company Sales Potential

- Estimating Current Demand

- Total Market Potential

- Area Market Potential

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