1. Class Two Market Potential, Market Demand, and Market Share

2. Market Potential, Market Demand and Market Share Market definition Market potential Market development index Managing market growth Product-market vs. Product life cycle

3. Market Definition The current market demand is composed of the existing customers and the potential customers. In Mature Markets the number of existing customers is almost equal to the number of potential customers. In Growth Markets existing customers is much less than the number of potential customers. Performance Management caters for: –Market existing demand + Potential demand –Rate of replacement and new customer purchase –Current market share + Potential market share

4. Market Vision & Strategic Market Definition. A myopic vision of the potential markets a business might serve translates into a narrow product-focused market definition. Narrow market definition restrict discovery of new market opportunities. Strategic Market definition includes a broad definition of all product-markets that are potential substitutes for the product-markets currently served by your business.

5. Vertical & Horizontal Markets Expansion

6. Benefits of a Broad Market Definition Reveals new opportunities in light of a broader set of customer needs Enables management to recognize potential substitutes and competitive threats Provides management with a thorough understanding of fundamental customer needs

7. Estimating Market Potential A served Market is defined as the market in which a business competes for target customers. It Includes both the business’s and it’s competitors’ customers.

8. Estimating Market Potential

9. Factors Limiting Full Market Development

10. Factors Restricting Market Growth Awareness –Complete understanding of benefits. Availability –Product Availability –Relevant Services Availability Ability to use –Lack of knowledge/skills

11. Factors Restricting Market Growth cntd. Benefit Deficiency –Key Benefits of the product/service is not important to a subset of potential customers Affordability –High Cost –To lift this restrictions, business work to reach lower target price points

12. Market Development Index MDI = Current Market Demand Market Potential MDI defines and sizes the potential of market growth. Low MDI (Below33%) –Untapped market potential –Can be served with higher prices and basic benefits X 100%

13. Market Development Index Medium MDI (33%-67%) –Business needs to address benefit deficiencies –Price Reductions comes into play High MDI (above 67%) –Still exists a growth opportunity –Requires aggressive solutions to overcome growth restriction factors. –Although expensive, but can be rewarding as competition will find it difficult to follow.

14. Market Potential and Market Growth Forces affecting rate of market growth –Market potential :- Max. number of customers who can enter the market. –Market penetration:- Total number of existing customer at a specific point in time. –Rate of entry :- The rate at which new customers enter the market.

15. Managing Market Growth Classification of Major Customer Groups by stage of entry: –Innovators –Early adopters –Early majority –Late majority –laggards

16. Customer Adoption & Market Development

17. Market Demand Market Demand = {Existing customers x Purchase amount} + { New customers x Purchase amount } Market demand forecast is estimated using combination of number of existing customers, their rate of repurchase and new unit sales.

18. Product Life Cycle, Demand and Profits

19. Market Share Metrics

20. Market Share Index (MSI) = Product X Product X Price X Product X Service Awareness Preference Acceptability Availability Experience Share Development Index (SDI) = Actual Market Share Potential Market Share X 100

21. Benefits of Market Share Index Helps identify sources of loss of market share. Provides a mechanism to assess market share gain/loss when a key area is changed. Enables the assessment of the market share.

22. Assignment 2.2 Taking Factors Restricting Market Growth into consideration, assume you are the Sales Manager of a Apple ipod, describe how you will develop a strategy to overcome each of these factors Answer should be in the range of 250-350 words.

23. ThankYou

24. Accelerating Market Growth