Selling Detergents A Executive Summary Term Paper
- Length: 12 pages
- Subject: Business - Advertising
- Type: Term Paper
- Paper: #51304302
Excerpt from Term Paper :
(Security Guards and Gaming Surveillance Officers) Thus there is a lot of increase in demands from channel members and the possibility if that there is a demand from them to provide them with lower priced products. Even existing marketing companies like Scott Paper Company are facing this problem. There are wholesaler sponsored voluntary chains, and retailer cooperatives which are likely to put pressure on a new manufacturer. (the Environment of Marketing Channels)
With all this consideration, it is better to look at a new market and the reasons for this are that the U.S. population is increasing at the low age end and the high age end, and there are a large number of individuals of different origins. In 2000, the total population was 275 million and this shows a growth of 10.5% from 249 million in 1990. Of this lot 58.4 million Americans were below the age of 15 and 20 million between the ages of five and nine. Again, 35.3 million or 13% were of African-American origin, Asian and Pacific Islanders were 11.1 million or 4% and 32.4 million or 12% were of Hispanic origin. These sections are expected to be the growing groups in future, and for any new brand or product, the target should be on these groups so that they are successful. (the Environment of Marketing Channels) it is essential for success in the market to think of new strategies.
e. Economic Forecast Component
Forecasting of sales for any product is difficult, and it is more difficult when the product is not ready. Some consider forecasting to be a science and other consider it to be an art, but it is probably a bit of both combined with a lot of good luck thrown in for good measure. Most managers believe that they are good at making forecasts, but the forecasts that they turn up with are usually wrong, and even when the forecasts are met by the actual figures, the meeting is often by chance than design. One of the greatest examples of this is in the brand launch sales forecasts, and most of these are wrong, and probably 80% of the forecasts that are made when the brand is launched are wrong. That is the reason most brands which are launched, turn out to be failures soon after the launch. The realization comes after a couple of months of the launch. The brand names are registered before the launch and that is why we keep seeing different products coming out with the same name, as most companies cannot keep producing and selling when the turnover is below a cost efficient figure.
Regarding the entire exercise of forecasting, there are two major types of forecasting and they are broadly classified as macro forecasting and micro forecasting. The entire exercise is however only a theoretical exercise to get to the expected sales levels for the product for which the sales levels are being sought. Macro forecasting is the estimation of the total market for the product. This means that it requires determining the level of demand in the market of the product during a fixed period within a short time for which the estimation is being sought. Though various names are given, it is impossible to provide any long-term estimations for the movement of the market demand for any product as various factors come into play, and all these factors are not known - the biggest unknown being product development as is now happening to the it market. Micro forecasting is with regard to the prediction of the sales for an individual unit. This is related with the market share of the sales organization and predictions of what the market share is going to be in the future. (Sales forecasting)
Even in this there is the influence of matters which are outside the control of planning and forecast. Let us take the case of Liverpool City. They were the UEFA Champions league winners in 2004-2005 and this has helped the whole city recover from its position earlier. The city had a poor reputation earlier due to the Heysel disaster when 39 Italian and Belgian fans died after the rioting fans from Liverpool caused a wall to collapse. This was during the 1985 European Cup final. This resulted in a very poor reputation for the city, and now the city has had world wide coverage due to the AC Milan v Liverpool final. This was followed up with extensive celebrations in the city, and the international image is now positive. The airport has also been named after John Lennon and this has been expanded. As a result, it is one of the fastest growing airports. The views on television have been of 300,000 persons crowding the areas of the city during the festivities. (Success in the City: How the UK's City-Regions may be Re-Born) the turn of events could not have been forecast by any person, and as a result of the events, Liverpool has become a city with a future for Britain, though it had seemed unlikely a few years back.
Getting back to the task of forecasting, since the product is well-known and has existed and been used for a number of years, forecasting can be simply done. It can be safely assumed that the trends which have been seen for the product in the last few years will also continue. We are talking about macro forecasts here. There are many methods to develop forecasts and which method has to be used depends on the degree of accuracy required, the availability of data and information, the time horizon that the sale forecast is expected to cover and the position of the product in its life cycle. (Sales forecasting) When there is a lot of money attached to the decisions that will be taken based on the forecast, then it is natural that a lot of money can be spent on preparing the forecast. This is expected to be more accurate while being more expensive. The second point about forecasting is the availability of data, and in some cases data is easily available like clothing, retail, food retailing, holidays, etc. In other cases the concerned data is more difficult to get. The next important point is the period that the forecast will cover, and the longer the duration it is, the more expensive will be the forecast. When the product is at the beginning of its life cycle then data of sales and information may not be available in a large quantity, but when it reaches a maturity stage, then the forecast can be based on a time series. Thus several considerations have to be made.
For the purpose of this write up, we are talking about a brand that has to be launched. Whether it will be launched at a national level or regional level depends mainly on the finances that are made available for the venture. In any case, certain historical data have to be gathered and some of them have to be used for the purpose of the forecast. The data can be gathered for unemployment rates, inflation rates, employment growth, housing starts, retail sales, interest rates, total consumption of material, investment in business and foreign currency rates against hard currencies. (Economics for Managerial Decision Making) These are all very good theory, but when the product is near maturity, then all that is not relevant any longer, and what we are mainly talking about is the target audience, as there are many brands and each brand is targeted to a different audience. The new brand that we are talking about will be targeted to a specific audience, and the consumption only in that segment is relevant. The pricing of different segments of the market is also different, and the segment we are talking about is not a segment of the rich users. The important part of the projection is then the volume of sales at that level, and what share is planned to be taken at that level. The product is of a nature that individuals will use in spite of all changes in economic indices. The growth in the total market is now not more than 2% a year, and so that growth is not relevant to a new brand.
What is being attempted here is an action of cost leadership and the purpose is clearly to gain an advantage in costs over competition. The market that we are trying to tap is a mass market and the segment that we are talking about buys mainly due to price. To compete in that segment the requirement is a competitive cost strategy. To achieve this one has to make sure that the costs are low for raw materials and energy, efficient production technologies and advantages of location. (Chemicals Regulation and the Porter Hypothesis: A Critical Review of the New European Chemicals Regulation) Other important requirements for leadership in costs are economies of scale…