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factors affecting the Market demand

Printing company

1. How does your organization go about estimating its sales? How does it estimate the demand for new products so that it can prepare a production run?

2. Which is more important for your organization: a. Lower cost, quality, customer expectations, or b. Some other feature? Why?

3. Is the market system the best kind of economic system for businesses to operate in? Why or why not? What role, if any, should the government play in affecting the supply and demand of a key commodity such as gasoline or electricity? Explain.

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1. How does your organization go about estimating its sales? How does it estimate the demand for new products so that it can prepare a production run?

Various factors affecting the Market demand:
- Past patterns of sales
- Estimates made by the sales force
- General economic conditions
- Competitors' actions
- Changes in the firm's prices
- Changes in product mix
- Market research studies
- Advertising and sales promotion plans
One should also take care of following key concepts and principles:

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

Market Potential: is the limit approached by the market demand as industry marketing expenditure approaches infinity, for a given environment. The phrase for a given environment is crucial in the concept of marketing potential. Consider the market potential for the airlines in the period of recession versus a period of prosperity. In the prosperity the market potential is higher.

Total Market Potential = Number of buyers in the specific market under the given assumptions * quantity purchased by an average buyer * price of an average unit.

The various ways of estimating market demand are:
1. Historical Sales figures
2. Forecasting current Demand by regression analysis, trend analysis
3. Estimating Industry growth
4. Estimating Economy's growth
Estimation of total sales= No. of expected buyer*quantity purchased by an average buyer*price of an average unit

Estimation of demand for new product
We will use forecasting tools to estimate the demand for new product. Forecasting is an essential tool in any decision making process. There are various techniques of forecasting:
Qualitative techniques involve primarily judgment, and quantitative, involving primarily historical data and mathematical models.
Qualitative techniques rely on judgment, intuition, and subjective evaluation. Among the major techniques within this category are market research (surveys), Delphi (panel consensus), historical analogy, and management estimation (guess).
Company Sales Forecast: is the expected level of company sales based on a chosen marketing plan and an assumed marketing environment. One can use the Time series and regression analysis to do sales forecast:

I Time series
Time series is one of the quantitative methods we use to determine patterns in data collected over time. Time series analysis is used to detect pattern of change in statistical information over regular intervals of time. We project these patterns to arrive at estimate for the future. Thus times series helps us cope with uncertainty about the future. There are four kinds of changes in time series analysis:
Secular trend: The value of variable tends to increase or decrease over a long period of time. The steady increase in cost of ...

Solution Summary

The various ways of estimating market demand are included.