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Chapter Six

Chapter Six. Measuring Market Opportunities. Keys to Good Forecasting. Make assumptions explicit Then debate the assumptions, not the forecast itself Collect data to verify or refute the assumptions Use multiple methods Top down Bottom up.

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Chapter Six

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  1. Chapter Six Measuring Market Opportunities

  2. Keys to Good Forecasting • Make assumptions explicit • Then debate the assumptions, not the forecast itself • Collect data to verify or refute the assumptions • Use multiple methods • Top down • Bottom up

  3. What are the advantages and limitations of the six main evidence-based forecasting methods? • Statistical methods • Observation • Surveys • Analogy • Judgment • Market tests

  4. Chain Ratio Forecasts (1) Reduced from actual response of 70%. See Exh. 6.2.

  5. What questions should informed users of marketing research ask, before approving a study? • What are the research objectives? Will the proposed study meet them? • Are the data sources appropriate? Secondary or primary? Qualitative or quantitative? • Is the research itself well designed? • Are the planned analyses appropriate?

  6. Chapter Seven Targeting Attractive Market Segments

  7. Three Kinds of Market Segmentation Criteria • Demographic • Reflects who the customers are • Geographic • Reflects where the customers are • Behavioral • Reflects how they behave in this usage category • Geo-demographic YAWYLVALS

  8. A Useful Tool for Assessing Market Segments: Segment Rating Chart

  9. Market Attractiveness High (8-10) l Moderate (4-7) Low (0-3) Low (0-3) Moderate (4-7) High (8-10) Company’s Competitive Position l = Market attractiveness and competitive position of distance runners segment How should we decide which segments to target?

  10. Exhibit 7.9Implications of Alternative Positions Within the Market-Attractiveness/Competitive-Position Matrix Competitive Position Weak Strong Medium • Desirable Potential Target • Protect position: • Invest to grow at max. digestible rate • Concentrate on maintaining strength • Build selectively: • Spec. in limited strengths • Seek to overcome weak. • Withdraw if indications of sustainable growth are lacking • Desirable Potential Target • Invest to build: • Challenge for leadership • Build selectively on strengths • Reinforce vulnerable areas High • Limited expansion or harvest: • Look for ways to expand w/out high risk; otherwise min. invest. and focus operations • Desirable Potential Target • Build selectively: • Emphasize profitability by increasing productivity • Build up ability to counter competition • Manage for earnings: • Protect existing strengths • Invest to improve position only in areas where risk is low Med. Market Attractiveness • Divest: • Sell when possible to maximize cash value • Meantime, cut fixed costs & avoid further investment • Manage for earnings: • Protect position • Minimize investment • Protect and refocus: • Defend strengths • Seek ways to increase current earnings without speeding market’s decline Low Sources: Adapted from George S. Day, Analysis for Strategic Market Decisions (St. Paul: West, 1986), p. 204; D. F. Abell and J. S. Hammond, Strategic Market Planning Problems and Analytical Approaches (Englewood Cliffs, NJ: Prentice Hall, 1979); and S. J. Robinson, R. E. Hitchens, and D. P. Wade, “The Directional Policy Matrix: Tool for Strategic Planning,” Long Range Planning 11 (1978), pp. 8-15.

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