MKTG 500

Ch.3 Market Potential, Market Demand, and Market Share

MKTG 500: Marketing ConceptsGo Beach!

MKTG 500

Strategic Market Definition of the Beverage Market

MKTG 500

Broad Strategic Market Definition

“……..” provides three key benefits:

It opens the window of opportunity to a broader set of customer needs.It provides better understanding of potential substitutes and competitive threats.It helps a business better understand fundamental customer needs.

MKTG 500

Market Potential

“……..” is the maximum potential for the market definition.

For instance, what is the market potential for disposable diapers?=> The number of babies between newborn and 2y. The market potential (maximum number) for personal computers is estimated to be 250 million per year.

MKTG 500

Maximum Market Potential and Current Market Demand

MKTG 500

Market Penetration and Market Development Index

MKTG 500

Customer Adoption and Market Development

MKTG 500

Market DemandAt any point in time, the market demand for a product is made up

of new customers to the market and existing customers who continue to purchase the product.

Example: Market demand for PCs Existing customers for PCs repurchase at an average rate of

every four to five years. Then, the market demand in 2005 can be written as:

Market demand in 2005= replacement purchases + New customer Purchase= Average 1999 and 2000 + entering market in 2005= 125 million + 75 million= 200 million

Question: What will be the market demand for PCs in 2010?

MKTG 500

Product Life Cycle and Market Demand

MKTG 500

MKTG 500

PC Market Demand and Marketing Profitability

MKTG 500

Sales Forecast

How much to produce?

Volume (Units) = Market Demand(Units)*Market Share

IF the unit volume forecast is correct, and a plant with the right level of capacity in built, total production volume will be near plant capacity, and the best production economies will be achieved.

MKTG 500

Market Share Development Tree