Module 8 Measuring Market Opportunities: Forecasting and Market Research By: Dr Shahinaz Abdellatif Objectives of the Session 1. To understand evidence-based forecasting techniques 2. To define the nature of marketing research (MR) 3. To show types of research methodology available for MR 4. To indicate methods of improving MR effectiveness Steps for Forecasting Before choosing a method to prepare a forecast, one first must know what is to be estimated or forecasted. First, there’s the size of the potential market, that is, the likely demand from all actual and potential buyers of a product or product class. An estimate of market potential often serves as a starting point for preparing a sales forecast. This market is comprised of those consumers who are likely to have both the willingness and ability to buy. There’s also the size of the currently penetrated market, those who are actually using the product. the size of the potential and penetrated markets for the market segments is called target market. They will also need a sales forecast, in which they predict sales revenues Keys to Good Forecasting Make assumptions explicit Then debate the assumptions, not the forecast itself Collect data to verify or refute the assumptions Keys to Good Forecasting Use multiple methods 1.Top down: Under the top-down approach, a central person or persons take the responsibility for forecasting and prepare an overall forecast, perhaps using aggregate economic data, current sales trends etc… 2. Bottom up: common in decentralised firms, each part of the firm prepares its own sales forecast, and the parts are aggregated to create the forecast for the firm as a whole. Methods for Forecasting Statistical methods Observation Surveys Analogy Judgment Market tests 1- Statistical methods: Statistical methods use past history and various statistical techniques, such as multiple regression or time series analysis, to forecast the future based o