IPD-S18-BMW-Market opportunity size

Launching Your Concept

University of IllinoisAt ChicagoInterdisciplinary ProductDevelopment

Innovation CenterSpring Semester

Estimating Market Opportunity Size

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Innovation CenterSpring Semester 2

Forecasting: source of uncertainty

The art of prophecy is verydifficult – especially withrespect to the future.

-- Mark Twain

It is far better to foresee even without certainty thannot to foresee at all.

-- Henri Poincare,Mathematician




How do we estimate the size of market opportunity?

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Logical Reduction Approach

Potential Target Market

Available Target Market

Attainable Target Market

Penetrated Target Market




ATAR Forecasting Model: The Chain Ratio Method




Estimating online grocery shopping

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Number of households 126.22 million

% of households with Internet access 87%Awareness 50%

Will order groceries online if available 25%

Discount of survey intentions 50%

Grocery purchases per household per year $5300

ØMarket forecast: $ ???

Example




Forecasting

The new product forecasting directive:

To accept that error will exist and work to develop the best, most meaningful forecast possible, coupled with an understanding of what underlies the forecast and its associated consequences.

Your forecast is going to be wrong.

Forecasting: Assumptions and Risks




_Develop critical assumptions._Pessimistic, likely, and optimistic scenarios needed._Describe different scenarios and develop and plausible stories of the future. _Identify a range of outcomes._Forecasting requires a combination of data and judgment.

Forecasting: Assumptions and Risks

New Product Forecasting: An Applied Perspective, K. Kahn (2006)




The marketing plan: Financials

_Revenue• Sales• Price

_Cost• Direct cost• Indirect cost

Marketing PlanAssignment




Questions to Consider: forecasting sales

• What is the revenue source of your new product?• How do you define your target market?• How are the likely interest of target customers?• How can your new product create new customers? • How can your new product increase purchases of

existing customers?• Who are your competitors?• What should be the price of your product?






Questions to Consider: forecasting sales

• What factors may influence market demand? How do these lead to different scenarios? • Competition• Social environment• Economic environment• Technological environment





Identify market research needed

• Secondary research • Demographics

- e.g., SimplyAnalytics• Usage behavior

• Primary research




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Documents

IPD-S18-BMW-Market opportunity size