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© Copyright 2017 Milner Strategic Marketing Ltd
Best in Class Competitive Intelligence |
Market ForecastingJonathan Davenport
Milner Strategic Marketing
25th April 2017
2© Copyright 2017 Milner Strategic Marketing Ltd
• Milner Strategic Marketing Ltd is a business
consultancy that specialises in working with technology
companies
• Extensive experience of forecasting markets for FTSE
listed companies with high levels of accuracy
• Acknowledged experts: materials widely published
• I have built over 50 market models over the last 8
years with forecast models containing ~15m cells and
a forecast of up to 20 years
Milner Strategic Marketing Ltd
3© Copyright 2017 Milner Strategic Marketing Ltd
Market forecast models build industry attractiveness
understanding and competitive strength assessment
4© Copyright 2017 Milner Strategic Marketing Ltd
• Identifying revenue
growth opportunities
The forecast output is valuable to all departments. Using
one data source means the whole company is aligned
3 key applications of model output
• Supporting an internal
investment decision
1
• Developing the
product roadmap
2
3
5© Copyright 2017 Milner Strategic Marketing Ltd
• A survey of forecasting
professionals identified 4 key
challenges in forecasting
• As a result, I’m here to
explain how to address these
challenges and carry out Best
in Class Forecasting
• This will cover the 4 key
questions that are the stay
awake issues
Survey: The biggest stay awake issues
How do I inject data analytics
into the forecasting process?
7© Copyright 2017 Milner Strategic Marketing Ltd
• Decomposition forecasting breaks the market down into its constituent parts
• Data analytics should be used to understand the historic shape of these
constituent parts, before forecasting forwards
• This has three key benefits:
Data analytics can be used in decomposition
forecasting to give a deep market understanding
Greater
accuracy
Greater
transparency
Greater
consistency
8© Copyright 2017 Milner Strategic Marketing Ltd
Markets are complex. Data analytics improves
forecasting for every individual element
GeographyGeography by Segment
by Product Type
2012 2021
Ma
rket S
ize
(G
eo
gra
ph
y,
Se
gm
en
t, P
rod
uct T
yp
e)
Product Type C
Product Type B
Product Type A
2012 2021
Product A
Ma
rke
t S
ize
(G
eo
gra
ph
y, S
egm
en
t,
Pro
du
ct T
yp
e, P
rod
uct)
Geography by Segment by
Product Type by Product
2021
Country G
Country E
Country A
Ma
rket S
ize
(G
eo
gra
ph
y)
Country C
Country D
Country B
Country F
Geography by
Segment
2012 2021
Ma
rket S
ize
(G
eo
gra
ph
y,
Se
gm
en
t)
Segment E
Segment C
Segment B
Segment D
Segment A
Other Product DRest of World
N=6 N=3
Product B
Product C
2012
N=4N=8
How do I understand new
markets where we have limited
knowledge?
10© Copyright 2017 Milner Strategic Marketing Ltd
• To gain market specific insights, use both quantitative and qualitative analysis to
understand the dynamics of the market
• Desk research should be used first to see what information can be gathered on:
• Primary research can then be used to expand knowledge of:
Primary research is invaluable for quantitative and
qualitative market understanding
Market dynamics
Competitive landscape
Macro-economic outlook
Regulatory framework
Innovation and rate of
change
Channels to market
Customer requirements
and behaviour
Competitor behaviour
Technology attitude
Attitudes to vendors
Market size by segment
11© Copyright 2017 Milner Strategic Marketing Ltd
Primary research provides deep insights into
customer and competitor behaviour
Channel Partners
FOI Customers
Internal Experts
Industry Experts
Customer-focused data Competitor-focused data
Structured Interviews
Surveys and Analysis
Suppliers
12© Copyright 2017 Milner Strategic Marketing Ltd
Forecasting emerging markets: Diffusion of Innovation
with market churn provides a robust approach for new tech
New
Adopters
Total
Demand
Market
Churn
Innovators
(2.5%)
Early
Majority
(34%)
Late
Majority
(34%)
Early
Adopters
(13.5%)
Laggards
(16%)
Market Churn
Total Demand
New Adopters – Diffusion of Innovation
Diffusion of Innovation and Market Churn Methodology
How can I be confident that a
‘trend’ isn’t a one off, but here to
stay?
14© Copyright 2017 Milner Strategic Marketing Ltd
Diffusion of Innovation provides predictability,
though the macroenvironment affects trendsConsumer product S-curves Source: North (2012)
In 1920’s America two new products were
launched the refrigerator (black line) and the
‘clothes washer’ (pink line)
By 1940 40% of households had a refrigerator
(black line) and 25% had a ‘clothes washer’
(pink line)
Forecast
By 1946 penetration of ‘clothes washers’
had fallen to ~15%
15© Copyright 2017 Milner Strategic Marketing Ltd
There is science to correctly identifying trends
Data Points
Hypothesise
reasons for
‘trend’
formation
Test and refine
‘trend’
hypothesis
Score ‘trend’
likelihood
Update
scenario and
forecast
Activity:
Data Collection
Activity:
Trend – Yes/No
Test Trend
Hypothesis
Score Trend
LikelihoodLikely Scenario?
16© Copyright 2017 Milner Strategic Marketing Ltd
The trend can be a hard trend or a soft trend
Hard trends
Low degree of
uncertainty
Forecast
based on
measurable &
predictable
factors
Soft trends
High degree of
uncertainty
Projection
based on
statistics &
hypotheses
17© Copyright 2017 Milner Strategic Marketing Ltd
Forecasting mature markets: Anchor Metrics can
be used to calculate sector demand
Anchor
Metric
Sector
Demand
Output
Multiplier
Anchor Metric
Production Output Multiplier
Total Segment Demand for one
time period
Total Segment Demand over
time
The Anchor Metrics Methodology
How do I deal with change &
unknowns (new entrants)?
19© Copyright 2017 Milner Strategic Marketing Ltd
Market mapping or perceptual mapping means you
can identify which competitors will succeed
Well-known company
High priceLow price
Boutique company
20© Copyright 2017 Milner Strategic Marketing Ltd
Scenario planning helps you anticipate the
dynamics of different potential futures
The Day After Tomorrow
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Describe each scenario
Analyse potential scenarios
Identify critical variables
Variables
Historic sales
Consumer
Adoption Theory
Market
penetration
Seasonality
Country
demographics
Economic factors
Forecast the impact of scenarios
1
2
3
4
Want to know more?
22© Copyright 2017 Milner Strategic Marketing Ltd
Strategy Handbook
• Strategic tools that provide executives and
managers with structured approaches to work
through their situation and options are explored
and critiqued
Forecasting the Future for Profit
• The white paper covers a range of forecasting
approaches in detail and the benefits of a robust
market forecast model
For a copy of either white paper, please drop me an
email (jonathan.davenport@milnerltd.com)
If you want to dig deeper, Milner has two white
papers which provide further tools and techniques
Jonathan Davenport
Head of Market Analysis
jonathan.davenport@milnerltd.com
+44 (0)7793 916886
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