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Market Demand/Potential

Market Demand/Potential. Market Demand. Actual: How much is sold?. Potential: How much could be sold?. Absolute: Upper limit of total demand in defined period of time. Relative: Demand in submarket, e.g. customer group, geographic area. Allocate promotional expenditures

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Market Demand/Potential

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  1. Market Demand/Potential

  2. Market Demand Actual: How much is sold? Potential: How much could be sold? Absolute: Upper limit of total demand in defined period of time Relative: Demand in submarket, e.g. customer group, geographic area • Allocate promotional expenditures • Allocate sales people • Locate facilities • Evaluate alternative market opportunities • Determine sales quotas • Determine number of retail outlets

  3. Market Demand – total volume that would be bought by a defined customer group in a defined geographical area in a defined time in a defined marketing environment under a defined marketing program.

  4. Methods for Estimating Demand • Market-Buildup Method • Identify number of purchasers X amount of their purchase • Multiple – Factor Index • Identify factor(s) correlated to sale of product,

  5. Steps In Calculating Demand Potential (Market Buildup Method): Identify 1. Absolute Target Market & Determine Size 2. Relative Market, e.g. Geographic Territory 3. Other Consumption Constraints 4. Average Purchases per Year per Customer 5. Total Purchases per year per Customer 6. Average Price 7. Total Dollar Purchases per Year 8. Your Company's Share of Purchases

  6. How Can You Define the Diaper Market? • Geographic Area • Customer Group • Product Category • Customer Needs

  7. How Can You Define the Disposable Diaper Market? • Geographic Area • World vs. U.S. vs. California • Customer Group • Mothers of children vs. Adults vs. • Hospitals vs. • Daycare Operators • Product Category • Regular vs. Premium • Manufacture Brand vs. Private Label • Customer Needs • Special Occasions vs. Diaper Rash • Age of Children • Gender of Children

  8. How Is the Disposable Diaper Market Defined in this Case? • California Disposable Diaper Market • California Disposable Diaper Market – Diaper Rash • California Disposable Diaper Market – Special Occasions

  9. California Disposable Diaper Market 1. Target Market Children <3 2. Geographic Territory California (11% of U.S.) 3. Consumption Constraints 75% Penetration Use Disposables 4. Average Purchase/Year/Customer 5/day X 365days = 5. Total Purchases/Year 6. Average Price 7. Total $ Purchases How Are These Diaper Market Potentials Calculated?

  10. California Disposable Diaper Market-Diaper Rash 1. Target Market Children <3 2. Geographic Territory California (11% of U.S.) 3. Consumption Constraints 75% Penetration Use Disposables 7.6%* Have Diaper Rash 4. Average Purchase/Year/Customer 5/day X 365days = 5. Total Purchases/Year 6. Average Price 7. Total $ Purchases How Are These Diaper Market Potentials Calculated?

  11. California Disposable Diaper Market-Special Occasion 1. Target Market Children <3 2. Geographic Territory California (11% of U.S.) 3. Consumption Constraints 75% Penetration Use Disposables 20% Special Occasion 4. Average Purchase/Year/Customer 5/day X 365days = 5. Total Purchases/Year 6. Average Price 7. Total $ Purchases How Are These Diaper Market Potentials Calculated?

  12. In this case is Market Demand/Potentiala threat or opportunity?

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