SEMESTER - II

UNIT - I
 Marke t ing

Definition:
‘Marketing is the management process that identifies,
anticipates and satisfies customer requirements
profitably’
- The Chartered Institute of Marketing(CIM)

‘The right product, in the right place, at the right time,

and at the right price’
- Adcock et al

‘Marketing is the human activity directed at satisfying human needs and wants through an
exchange process’
- Kotler 1980

‘Marketing is a social and managerial process by which individuals and groups obtain what
they want and need through creating, offering and exchanging products of value with
others’
- Kotler 1991
 Marke t ing
Implications of marketing

• Who are our existing / potential customers?

• What are their current / future needs?

• How can we satisfy these needs?

– Can we offer a product/ service that the

customer would value?

– Can we communicate with our customers?

– Can we deliver a competitive product of

service?

• Why should customers buy from us?

 A Market Consists of…

Prospective buyers willing and able to purchase the existing or potential

offering of an organization.

Focus on
Buyers
Effective
Demand
“Offering”
rather than
product or service

Market Share
Successful marketing requires:

Profitable
Offensive (rather than defensive)
Integrated
Strategic (is future orientated)
Effective (gets results)
Hugh Davidson 1972

The marketing concept

• choosing and targeting appropriate customers

• positioning your offering
• interacting with those customers
• controlling the marketing effort
• continuity of performance
Core Concepts of Marketing

Target Markets & Segmentation

Needs, Wants, and Demands

Product or Offering

Value and Satisfaction

Exchange and Transactions

Relationships and Networks

Marketing Channels

Supply Chain

Competition

Marketing Environment
 Simple Marketing System

Communication

Goods/services
Industry Market
(a collection (a collection
of sellers) Money of Buyers)

Information
 Structure of Flows

Resources Resources
Money Resource Money
markets

Services,
money Taxes,
goods
Services, Taxes
money
Manufacturer Government Consumer
markets markets markets
Taxes,
goods Services

Services, Taxes,
money goods

Money Money
Intermediary
Goods, services markets Goods, services
Types of Markets
 Co-marketing (Collaborate marketing)

Co-marketing (Collaborate marketing) is a marketing practice where two companies cooperate with
separate distribution channels, sometimes including profit sharing. It is frequently confused with co-promotion.

Cross-marketing describes the practice where two individual entities companies exchange marketing channels for
mutual benefit. No new product, service or brand is created here.
 MOTIVATION

INTERNAL
MARKETING

QUALITY TRAINING
 The Four Ps

Marketing
Mix

Product Place

Price Promotion Convenience

Customer
Solution
Customer Cost Communication
Company Orientations Towards the Marketplace

Production Concept Consumers prefer products that are

widely available and inexpensive

Consumers favor products that

Product Concept offer the most quality, performance,
or innovative features

Consumers will buy products only if

Selling Concept the company aggressively
promotes/sells these products

Focuses on needs/ wants of target

Marketing Concept markets & delivering value
better than competitors
 Customer Delivered Value

Starting
point Focus Means Ends

Existing Selling and Profits through

Factory products promotion sales volume

(a) The selling concept

Customer Integrated Profits through

Market needs marketing customer
satisfaction

(b) The marketing concept

Traditional Organization Chart

Top
Management

Middle Management

Front-line people

Customers
Customer-Oriented Organization Chart

Customers

Front-line people

Middle management

Top
manage-
ment
Evolving Views of Marketing’s Role
 Marketing Functions

Financing
Pricing
Marketing-Information Management
Producers Product/Service Management Consumers
Promotion
Distribution
Selling
Marketing Functions
 Marketing Planning
Market-Oriented Strategic Planning

Objectives Resources

Profit
and
Growth
Skills Opportunities
Strategic-Planning, Implementation, and Control Process

Planning Implementation Control

Organizing
Corporate Measuring
planning results
Division
planning Diagnosing
Implementing
results
Business
planning
Taking
Product corrective
planning action
The Boston Consulting Group’s Growth-Share Matrix
Market Attractiveness: Competitive- Position Portfolio Classification
 Market Attractiveness:
Competitive- Position Portfolio Classification
 Three Intensive Growth Strategies: Ansoff’s
Product/Market Expansion Grid
Existing New
products products

Existing 1. Market 3. Product

markets penetration development

New 2. Market
markets development 4. Diversification

"Penetration is a measure of brand or category popularity. It is defined as the number of people who
buy a specific brand or a category of goods at least once in a given period, divided by the size of the
relevant market population."
Marketing management process
• Analysis/Audit - where are we now?
• Objectives - where do we want to be?
• Strategies - which way is best?
• Tactics - how do we get there?
• (Implementation - Getting there!)
• Control - Ensuring arrival
Why is marketing planning necessary?
• Systematic futuristic thinking by
management
• better co-ordination of a company’s
efforts
• development of performance standards
for control
• sharpening of objectives and policies
• better prepare for sudden
developments
• managers have a vivid sense of
participation
Criticisms of marketing planning
• Formal plans can be quickly overtaken by
events
• Elements of the plan my be kept secret
for no reason
• gulf between senior managers and
implementing managers
• the plan needs a sub-scheme of actions
Objectives of the marketing plan
• Acts as a roadmap
• assist in management control and
monitoring the implementation of
strategy
• informs new participants in the plan of
their role and function
• to obtain resources for implementation
• to stimulate thinking and make better
use of resources
The contents and structure of the
Cautionary notes for effective
marketing plan
planning
• The executive summary
• table of contents • Don’t blindly rely on mathematical and
• situational analysis and target market statistical calculations. Use your judgement
• marketing objectives as well
• marketing Strategies • Don’t ever assume that past trends can be
• marketing tactics exploited into the future forever
• schedules and budgets
• if drawing conclusions from statistical data,
• financial data and control make sure the sample size is sufficiently
large
Behavioural planning problems
• Planning recalcitrance: resistance and non- Standard Planning Framework
co-operation by managers in planning
• fear of uncertainty in planning: a lack of • Analysis - where are we now?
comfort in planning activities
• Objectives - where do we want to
• political interests in planning activities: be?
resource bargaining, padding of
requirements, and avoidance of consensus • Strategies - which way is best?
• planning avoidance: compliance rather than • Tactics - how do we ensure arrival?
commitment to planning • Control - are we on the right track?
 Impl ementati on
The Marketing Implementation Process

Marketing
Strategy

Tactical
Decisions

Internal Implementing the

Marketing Mix
External Factors
Factors

Monitoring
Results

Adaptation of
strategy/tactics
 Activities to establish and build customer relationships
• Need for long term relationships
• UACCA (Unawareness, Awareness,
Comprehension, Conviction, Action) - ‘expensive’
in promotional terms
• Build sales to existing customers
• Improving service quality
• Auditing the fulfilment of customer needs
• Cause a cultural change to a marketing Orientation.

Relationship marketing

• The consistent application of up-to-date

knowledge of individual customers to
product and service design.
• Not mass marketing. Aimed at individual.
• Customer retention not attraction
• Long term, ongoing relationships
• Regular customer contact
• Spirit of trust
 Total Quality and Marketing Managing the organisation /
stakeholder interface
• Quality is what customers say it is.
• J.M.Juran and TQM • External and internal relationships
• zero defects • Accountability of managers
• Right time • Marketer projects an image and style
• continuous improvement • Ethical responsibilities towards
• Statistical process control (SPC) consumers
• Just In Time (JIT) • Social responsibility
• Quality Assurance e.g ISO 9000  dangerous products e.g. cigarettes
 dishonest marketing and promotion
 the abuse of power
 the availability of information

Implementation problems
• Internal problems e.g change of
management
• External problems e.g. changing competition
• Poor planning
• Poor intelligence
• Poor execution
MCKINSEY’S 7S FRAMEWORK
The Marketing Environment and
Competitor Analysis

1. PESTEL analysis

2. SWOT analysis

3. Five forces analysis

 The Marketing Environment and Competitor Analysis

PESTLE stands for - Political, Economic, Sociological, Technological, Legal,

Environmental. The term PESTLE has been used regularly in the last 10 years
and its true history is difficult to establish. Various other similar acronyms
have been used including ETPS, STEP, PEST, and STEEPLE (Ethical)

Environmental
Political/legal / Legislation Factors
• Monopolies legislation
• Environmental protection laws
• Taxation policy
• Employment laws
• Government policy
• Others..
Socio-Cultural factors
• Demographics
• Distribution of income
• Social mobility
• Lifestyle changes
• Consumerism
• Levels of education
• Others..
Economic Factors
• Inflation
• Employment
• Disposable income
• Business cycles
• Energy availability and cost
• Others..
Technological Factors
• New discoveries and innovations
• Speed of technology transfer
• Rates of obsolescence
• Internet
• Information technology
• Others..
SWOT analysis
 Five forces analysis
Potential
entrants

Threat of
entrants

Suppliers COMPETITIVE Buyers

RIVALRY
Bargaining Bargaining
power power

Threat of
substitutes

Substitutes
Micro & Macro Environmental Analysis
 Macro-environmental Forces

• World trade enablers

• Economic power
• Rise of trade blocs
• International monetary crises
• Use of barter & countertrade
• Move towards market economies
• “Global” lifestyles
• Opening of “new” markets
• Emerging transnational firms
• Cross-border strategic alliances
• Regional ethnic & religious conflict
• Global branding
 Demographic Environment
Ethnic origin has been defined as a
group of people who share a
common descent, a sense of
collective identity and usually a
shared cultural heritage and tradition
(Crysdale and Bettie, 1973).
Worldwide Population Growth

Population Age Mix

Ethnic Markets

Educational Groups

Household Patterns

Geographical Shifts in Population

Shift from Mass Market to Micro markets

 Economic Environment

Income Distribution
Subsistence economies
Raw-material-exporting economies
Industrializing economies
Industrial economies

Savings, Debt, &

Credit Availability
 Natural Environment

Changing Role
of Government

Higher Pollution Natural Shortage of

Levels Environment Raw Materials

Increased Costs
of Energy
 Issues in the Technological Environment

Accelerating Pace Unlimited Opportunities

of Change for Innovation

Issues in the Technological

Environment

Varying Increased
R & D Budgets Regulation
 Political - Legal Environment

Increased
Legislation
Political-
Legal
Environment

Special-
Interest
Groups
 Social/Cultural Environment

Of
Oneself

Of Of
the Universe Others
Views
That Express
Of Values Of
Nature Organizations

Of
Society
 Buyer Behaviour
• Buying Behavior
– The decision processes and actions of people involved in buying and
using products.
• Consumer Buying Behavior
– The decision processes and purchasing activities of people who
purchase product for personal or household use and not for business
purposes,

Demographic Factors • Age

• Stage in family life cycle
• Occupation
• Economic circumstances
• Lifestyle
• social influence variables
• family background
• reference groups
• roles and status
 Types of buyer behaviour

1. Complex buyer behaviour - High Involvement (e.g. PC, New House)

2. Dissonance-reducing behaviour - Anxiety after purchase.(Eg. Diamond Ring)
3. Habitual buying behaviour e.g. salt - little difference
4. variety seeking behaviour - Significant brand differences e.g soap powder

Five Types of Buyer Behavior

1. For any new idea, there is a group of innovators. Innovators are defined as the first 5-
10% of the people who first adopt any given idea.

2. The next group, the early adopters are about 10-15% of us. These people are the
trend-setters.

3. The early majority (about 30% of us) wait a little longer to make our decision.

4. The late majority (another 30% of us) wait still longer to get on the band wagon.

5. The last group, the laggards, (about 20% of us) are true traditionalists.
 The Buying Decision Process
• Recognition of the need e.g a new PC
• Choice of involvement level (time and effort justified) e.g. two week ends
• Identification of alternatives e.g. Dell, Apple
• Evaluation of alternatives I.e. price, customer service, software support,
printer/scanner package
• Decision - choice made
• Action
• Post-purchase behaviour : Types:1. Positive and 2. Negative Post Purchase Behaviour

The Consumer Buying Process

Marketing Inputs Purchase Decisions
Product Consumer
Product Choice
Price
Location Choice
Promotion
Brand Choice
Place Psychological Inputs
Other Choices
Culture
Attitude
Learning
Perception
MASLOW’S HIERARCHY OF NEEDS
Influences on the Buying Decision Process

Physical
Surroundings

Mood of Social
Consumer Surroundings
Situational
Influences

Purchase Time
Reason Dimension
Influences on the Buying Decision Process (cont’d)

Perception

Lifestyle Motives

Psychological
Influences

Personality and
Learning
Self-Concept

Attitudes
Social Influences on the Buying Decision Process

Roles

Culture
Family
and
Influences
Subcultures

Social
Influences
Social Reference
Classes Groups

Digital Opinion
Networks Leaders
 Organisational Buyer Behaviour
‘The decision-making process by which formal organisations establish the need for
purchased products and services, and identify, evaluate, and choose among alternative
brands and suppliers’
- Kotler and Armstrong 1989

Characteristics of organisational buyer behaviour

• Organisation purpose
• Derived demand
• Concentrated purchasing
• Direct dealings
• Specialist activities
• Multiple purchase influences
 Consumer Problem Solving Strategies

Consumer
Buying
Behaviors

Limited Extended
Routinized Impulse
Problem Problem
Response Buying
Solving Solving
 MARKET SEGMENTATION
• Definition
– Dividing a market into distinct groups
with distinct needs, characteristics, or
behavior who might require separate
products or marketing mixes.

Steps in Market Segmentation, Targeting,

and Positioning (STP)
 Steps in Segmentation,
Targeting, and Positioning

6. Develop Marketing
Mix for Each Target Segment Market
5. Develop Positioning Positioning
for Each Target Segment
4. Select Target
Segment(s) Market
3. Develop Measures Targeting
of Segment Attractiveness
2. Develop Profiles
of Resulting Segments
Market Segmentation
1. Identify Bases
for Segmenting the Market
 Bases for Segmenting Business Markets

Personal Demographics
Characteristics

Bases
for Segmenting
Situational Business Operating
Factors Markets Characteristics

Purchasing
Approaches
 Bases for Segmenting Consumer Markets

Geographic
Nations, states,
regions or cities

Demographic

Age, gender, family size and

life cycle, or income

Psychographic
Social class, lifestyle,
or personality

Behavioral
Occasions, benefits,
uses, or responses
Market Segmentation
Geographic Segmentation Variables Demographic Segmentation Variables
•Geographical segmentation
•Marketing mixes are customized Most popular type
geographically Demographics are closely related to
needs, wants and usage rates
World Region or Country
Country Region Age
City Gender
City or Family size
Metro Size Family life cycle
Neighborhood Income
Density Ethnicity
Climate Occupation
Education
Religion
Generation
Behavioral Segmentation Variables Nationality

Lifestyle, social class, and personality-

based segmentation Psychographic Segmentation
Occasions
Benefits
User Status Psychographic segmentation
User Rates divides a market into different
Loyalty Status groups based on social class,
Readiness Stage lifestyle, or personality
Attitude Toward the Product characteristics.
Using Multiple Segmentation
Bases: Geodemographics
 Bases for Segmenting International Markets

International Markets

Political/
Geographic Economic
Legal

Cultural Inter market

Segmenting International Markets
• Geographic segmentation
– Location or region
• Economic factors
– Population income or level of economic development
• Political and legal factors
– Type / stability of government, monetary regulations, amount of bureaucracy, etc.
• Cultural factors
– Language, religion, values, attitudes, customs, behavioral patterns
Segmenting Business Markets
•Demographic segmentation
•Industry, company size, location
•Operating variables
•Technology, usage status, customer capabilities
•Purchasing approaches
•Situational factors
•Urgency, specific application, size of order
•Personal characteristics
•Buyer-seller similarity, attitudes toward risk, loyalty
Requirements for Effective Segmentation

Measurable • Size, purchasing power, profiles

of segments can be measured.

Accessible • Segments must be effectively

reached and served.

Substantial • Segments must be large or

profitable enough to serve.

Differential • Segments must respond

differently to different marketing
mix elements & actions.

Actionable • Must be able to attract and serve

the segments.
 Evaluating Market Segments
• Segment Size and Growth
Potential
– Sales, profitability and
growth rates
• Segment Structural
Attractiveness
– Competition,
substitute products,
– buyers & supplier
power, new entrants
(Porter’s Five Forces)
• Company Objectives and
Resources
– Core competencies
– “What business do we
want to be in?”
Market Preference Patterns
Levels of Market Segmentation
Targeting Segments - Overview
 Undifferentiated (Mass) Marketing

– Ignores segmentation opportunities

 Differentiated (Segmented) Marketing

– Targets several
segments and designs
separate offers for
each.

– Coca-Cola (Coke, Sprite,

Diet Coke, etc.)
– Procter & Gamble
(Tide, Cheer, Gain,
Dreft, etc.)
– Toyota (Camry, Corolla,
Prius, Scion, etc.)
 Niche Marketing

– Targets one or a couple small segments

– Niches have very specialized interests
 Micromarketing

• Tailoring products and marketing programs to suit

the tastes of specific individuals and/or locations.
 Benefits of
Market Segmentation

1. Identifies opportunities for new product development

2. Helps design marketing programs most effective for reaching

homogenous groups of buyers

3. Improves allocation of marketing resources

 Target Marketing

• Evaluating Market Segments

– Segment size and growth
– Segment structural attractiveness
• Level of competition
• Substitute products
• Power of buyers
• Powerful suppliers
– Company objectives and resources

Target Marketing Strategies

 Market Targeting
Choosing a Market-Coverage Strategy

Company
Resources

Product
Variability

• Choosing a Target- Product’s Stage

Marketing Strategy in the Product Life Cycle
Requires Consideration of:
– Company resources
Market
– The degree of product variability
Variability
– Product’s life-cycle stage
– Market variability
– Competitors’ marketing Competitors’
strategies Marketing Strategies
 Market Targeting
Evaluating Market Segments

• Segment Size and Growth

– Analyze sales, growth rates and expected profitability.

• Segment Structural Attractiveness

– Consider effects of: Competitors, Availability of Substitute
Products and, the Power of Buyers & Suppliers.

• Company Objectives and Resources

– Company skills & resources relative to the segment(s).
– Look for Competitive Advantages.
Patterns of Target Market Selection:
Product x Market Matrices
 Positioning

• The place the product occupies in

consumers’ minds relative to competing
products.
• Typically defined by consumers on the
basis of important attributes.

• Choosing a Positioning Strategy:

Positioning for Competitive
– Identifying possible competitive
advantages -- many potential
Advantage
sources of differentiation exist: Marketers must:
• Products • Plan positions to give
• Services products the greatest
advantage
• Channels
• Develop marketing mixes
• People to create planned
• Image positions
 Positioning Example

To (target segment and need) our (brand) is a

(concept) that (point-of-difference).

“To busy mobile professionals who need to always be in the

loop, Blackberry is a wireless connectivity solution that allows
you to stay connected to people and resources while on the go
more easily and reliably than the competing technologies.”
 Steps to Choosing and Implementing
a Positioning Strategy

• Step 1. Identifying a set of possible competitive

advantages: Competitive Differentiation.

• Step 2. Selecting the right competitive

advantage.

• Step 3. Effectively communicating and

delivering the chosen position to the market.
 Positioning Strategy
• Competitive advantages
• Points of Parity
• Points of Difference => Differentiation

Positioning results from differentiation and

competitive advantages.

Positioning may change over time.

Positioning for Competitive Advantage: Strategies

Product Product
Class Attributes

Away from Benefits

Competitors G Offered
H C
A
D
Against a E Usage
B F
Competitor Occasions

Users
Selecting the Right Competitive Advantages

Important

Profitable Distinctive
Criteria
for
Determining
Which
Differences
Affordable to Superior
Promote

Preemptive Communicable
Developing Competitive Differentiation

Product Service

Areas for Competitive

Differentiation

Personnel Image
Positioning Strategy Process

Market/Customer Competitive Differentiation

Market Vision Segmentation Strategy Evidence

Market Entry Customer

Market Segment Critical Need and Positioning Strategy
Market Segment
Drivers Total Product Statement
Requirements

Technology
Company Total Product Total Product
Enablers Customer Segments Solution’s Potential Assets
Differentiators
Customer/
End-User Problem(s) Technology and Total
Definition Competitors’ Total Product Product Roadmap
Critical Needs Solutions’ Potential
Differentiators
Applications Partnerships
Company Product/ Barriers to
Product/Market Service Match Adoption
Category Business Model
Market Entry Customer Segment
Mission Roadmap and Market Segment Company
Leadership Roadmap Differentiator (Functional) Programs
Statement
Positioning Both Company and Product

Company
Positioning Strategy
• Market • Product
• Technology • Company

Product #2 Product #1 Product #3

• Technology • Technology • Technology
• Functions/Benefits • Functions/Benefits • Functions/Benefits
 Positioning Errors

• Under-positioning:
– Not positioning strongly enough.

• Over-positioning:
– Giving buyers too narrow a picture of the product.

• Muddled Positioning:
– Leaving buyers with a confused image of the product.
 What is M KIS?
‘MKIS (MIS) is a set of procedures and methods for the regular, planned collection, analysis
and presentation of information for use in marketing decisions’
- American Marketing Association

The components of a computerised MKIS

Data Bank

Statistical Display Marketing

Data Bank
Bank unit Manager

MKIS

The components of a computerised MKIS

1. Data bank - raw data e.g historical sales data, secondary data
2. Statistical bank - programmes to carry-out sales forecasts, spending projections
3. A model bank - stores marketing models e.g Ansoff’s matrix, Boston Matrix
4. Display unit - VDU and keyboard
A marketing intelligence system is a set of procedures and sources used by managers to
obtain everyday information about developments in the marketing environment.

Steps to Quality Marketing Intelligence

• Train sales force to scan for new developments
• Motivate channel members to share intelligence
• Hire external experts to collect intelligence
• Network externally
• Utilize a customer advisory panel
• Utilize government data sources
• Purchase information

Sources of Competitive Information

• Independent customer goods and service review forums
• Distributor or sales agent feedback sites
• Combination sites offering customer reviews and expert opinions
• Customer complaint sites
• Public blogs
 Demand

Company
Demand

Market
Demand

Estimating Current Demand Estimating Future Demand

1. Total Market Potential 1. Survey of Buyers’ Intentions
2. Area Market Potential 2. Composite of Sales Force Opinion
3. Industry Sales 3. Expert Opinion
4. Market Share 4. Past Sales Analysis
5. Market Test Method
 Marketing Research
‘the systematic gathering, recording and analysing of data about problems relating to the
marketing of goods and services’
- AMA (American Marketing Association)
Terminology of Marketing Research
1. Primary data - collected firsthand
2. Secondary data - already exists, desk research
3. Quantitative research - statistical basis
4. Qualitative research - subjective and personal
5. Sampling - studying part of a ‘population’ to learn about the whole
The Marketing Research Process
1. Set objectives
2. Define research Problem
3. Assess the value of the research
4. Construct a research proposal
5. Specify data collection method
6. Specify techniques of measurement
7. Select the sample
8. Data collection
9. Analysis of results
10. Present in a final report
 Good Marketing Research:
 Is scientific
 Is creative
 Uses multiple methods
 Realizes the interdependence of models & data
 Acknowledges the cost & value of information
 Maintains “healthy” skepticism
 Is ethical
Marketing Research Techniques
• Interview
• face-to-face
• telephone
• postal questionnaire
• Attitude measurement
• cognitive component (know/believe about an act/object)
• affective component (feel about an act/object)
• cognitive component (behave towards an object or act)
• Projective techniques
• sentence completion
• psychodrama (yourself as a product)
• friendly Martian (what someone else might do)
 Marketing Research Techniques continues…

• Likert scale (5 Points Scale)

• strongly agree
• agree
• neither agree nor disagree
• disagree
• strongly disagree
• Semantic differential scales - differences between words e.g. practical v impractical
• Group discussion and focus group
• Postal research questionnaires
• Diary panels - sources of continuous data
• In-home scanning - hand-held light pen to scan barcodes
• Telephone research
• Observation
• home audit
• direct observation
• In-store testing
 Research Approaches

Observational

Focus-group

Survey

Behavioral

Experimental
Defining the Problem & Research Objectives

•Sheds light on problem -

Exploratory suggest solutions or
Research
new ideas.

Descriptive
Research •Ascertain magnitudes.

•Test cause- and-effect

Causal relationships.
Research •Tests hypotheses about cause-
and-effect relationships.
 Forecasting and Demand Measurement
• How can we measure
market demand?
– Potential market India
– Available market
– Target market
– Penetrated market

Estimating Future
Demand

 Survey of Buyers’ Intentions

 Composite of Sales Force
Opinions
 Expert Opinion
 Past-Sales Analysis
 Market-Test Method
A Vocabulary for Demand Measurement

Market Demand
Market Forecast
Market Potential
Company Demand
Company Sales Forecast
Company Sales Potential
 Making a
Sales Forecast
Sales Forecast is a function of:

1. Market potential (M)

2. Proportion of market you are Targeting (T)

3. Extent of market Coverage (C)
4. Number of Units expected to sell per customer during the
year (U)
5. Average Price per unit (P)

Sales Forecast = M x T x C x U x P
 Making a Sales Forecast
Example

Total number of potential buyers = 1 Million

Target Market (25%) = x 0.25

Market Coverage (75%) = x 0.75

Units purchased per year (20) = x 20

Average Price ($10) = x $10

Forecasted Sales = $ 37.5 Million