Market Demand/Potential

Actual: How much is sold? Potential: How much could be sold?

Market Demand

Absolute: Upper limit of total demand in defined period of time

Relative: Demand in submarket, e.g. customer group, geographic area

•Evaluate alternative market opportunities

•Determine sales quotas

•Determine number of retail outlets

•Allocate promotional expenditures

•Allocate sales people

•Locate facilities

Market Demand – total volume that would be bought by a defined customer group in a defined geographical area in a defined time in a defined marketing environment under a defined marketing program.

Methods for Estimating Demand

• Market-Buildup Method– Identify number of purchasers X amount of

their purchase

• Multiple – Factor Index– Identify factor(s) correlated to sale of product,

Steps In Calculating Demand Potential (Market Buildup Method):

Identify

1. Absolute Target Market & Determine Size2. Relative Market, e.g. Geographic Territory3. Other Consumption Constraints4. Average Purchases per Year per Customer5. Total Purchases per year per Customer6. Average Price7. Total Dollar Purchases per Year8. Your Company's Share of Purchases

How Can You Define the Diaper Market?

• Geographic Area

• Customer Group

• Product Category

• Customer Needs

How Can You Define the Disposable Diaper Market?

• Geographic Area– World vs. U.S. vs. California

• Customer Group– Mothers of children vs. Adults vs.– Hospitals vs.– Daycare Operators

• Product Category– Regular vs. Premium– Manufacture Brand vs. Private Label

• Customer Needs– Special Occasions vs. Diaper Rash– Age of Children– Gender of Children

How Is the Disposable Diaper Market Defined in this Case?

• California Disposable Diaper Market

• California Disposable Diaper Market – Diaper Rash

• California Disposable Diaper Market – Special Occasions

How Are These Diaper Market Potentials Calculated?

California Disposable Diaper Market1. Target Market Children <3

2. Geographic Territory California (11% of U.S.) 3. Consumption Constraints 75% Penetration Use Disposables 4. Average Purchase/Year/Customer 5/day X 365days = 5. Total Purchases/Year 6. Average Price7. Total $ Purchases

How Are These Diaper Market Potentials Calculated?

California Disposable Diaper Market-Diaper Rash1. Target Market Children <3

2. Geographic Territory California (11% of U.S.) 3. Consumption Constraints 75% Penetration Use Disposables 7.6%* Have Diaper Rash 4. Average Purchase/Year/Customer 5/day X 365days = 5. Total Purchases/Year 6. Average Price7. Total $ Purchases

How Are These Diaper Market Potentials Calculated?

California Disposable Diaper Market-Special Occasion1. Target Market Children <3

2. Geographic Territory California (11% of U.S.) 3. Consumption Constraints 75% Penetration Use Disposables 20% Special Occasion 4. Average Purchase/Year/Customer 5/day X 365days = 5. Total Purchases/Year 6. Average Price7. Total $ Purchases

In this case is Market Demand/Potentiala threat or opportunity?