Market and Sales Analysis Research – Introductory Brief

Lotus Performance Cars is counting on its new agency, McCann-Erickson, to prepare advertising for a line expansion that includes a $120,000 super car.

The company plans to launch its $120,000 super car a direct competitor to the Italian-made Ferrari Testarossa in 1990 or 1991. Lotus plans to build 200 to 250 of the cars a year.

Lotus is a very low volume car that is marketed to very select individuals, said Wes Fredericks, group executive consultant at Group Lotus.

Lotus’ target audience is 35-to-45 year old professionals, primarily males with incomes of more than $150,000 a year or whose net worth is at least $1 million.

Mr. Fredericks estimated there are 10,000 to 20,000 persons in the US who can afford and would be interested in owning one of the Lotus models.

Marketing management relies heavily on research in setting marketing policies, in planning marketing operations, and in controlling marketing operations, including the functioning of the sales unit. In its broadest meaning, market and sales analysis research covers the identification and measurement of all those variables that individually and in combination have an effect on sales. Thus, such activities as activities as measurement of market potential, sales forecasting, sales territory evaluation, and measurement of sales representative’s performance are included.

Any marketing expenditure (input) assumes some kind of a result (payout). Marketing directors must have enough knowledge of the market and their organization’s performance to estimate the impact of their organization’s efforts on the market. Market and sales analysis research makes up a large portion of the activity of most marketing research departments. Research studies dealing with the development of market potentials, market share analysis, and sales analysis are among the most common activities undertaken by a ,marketing research unit. Short range forecasting, long range forecasting and establishment of sales quotas and sales territories are also standard activities.

Market potential analysis will apply to those studies of individual markets that seek to determine the sales potential(s) within them. Sales forecasting will be used to mean the prediction of sales of a particular product, company, branch office, or other unit for a given time period. Sales analysis will include the analysis of a company’s sales to ascertain such things as distribution of sales by territories, by type and size of customer, by order size, by product, and by combinations of these classifications.

Market Potential Analysis:

Marketing management is interested in obtaining sales potentials for each of the geographic markets it serves to help determine the amount of sales effort that should be allocated to a specific market. Market or sales potential must be stated for a given product or group of products or a given area for a given period of time, usually a year. The sales potential for product A in a given geographical area for 1988 is the maximum amount that can be sold in that area by all sellers of product A in that year. Area potentials can be expressed in both absolute terms and as a percent of the total market (100 percent).

Since most products are similar to a number of others, consumers often engage in considerable substitution; therefore, the degree of substitution, as well as the conditions under which it takes place, must be considered in the development of potentials. The decision on whether to include or exclude closely related substitutes will often have a pronounced effect on estimated sales potentials. For example, in considering the relative sales potential for canned peas one would have to consider the possible sales of frozen peas, since the two can be viewed as close substitutes for each other.

Market potentials and sales forecasts are not the same thing, although the two are sometimes used interchangeably. Market potentials typically refer to total sales possibilities. Several different potentials may be considered, to total sales possibilities. Several different potentials may be considered depending on what conditions are assumed. One potential could have to do with the conditions of use – for example, the amount of tooth paste that would be used if all persons using toothpaste brushed after every meal. Another potential could be one based on brushing only once a day, and so on. Thus, the word potential has specific meaning only in terms of the assumptions used when making the calculation.

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