BA 101 1st Edition Lecture 5 Outline of Last Lecture 1 Foundation A Constructing a CSS score 2 Lecture Marketing strategy and decisions Outline of Current Lecture I Announcements admin II Lecture Buyer s and seller s markets III Sales forecasting methods insights and techniques Current Lecture Announcements Quiz 1 due at 4pm Jan 20th Quiz 2 open after class Jan 20th due 4pm Jan 29th Foundation Tutors Now available In the Braddock tutoring center located in the Lillis Atrium Foundation Rehearsal Tutorial Due Jan 22nd Complete all stages by the 22nd Ignore what foundation tells you about the quiz you get five points for completing it in 9 or fewer tries I REVIEW Customer Survey Score components in foundation Product positioning performance and size MTBF mean time before failure Price Age years since initial introduction Awareness how aware your customers are about your product Accessibility how easily your customers are able to find purchase your product Accounts receivable policy your customer s ability to purchase your product on credit Fast Track pages 5 6 Customer buying criteria Expectations Low tech importance Price 15 30 41 These notes represent a detailed interpretation of the professor s lecture GradeBuddy is best used as a supplement to your own notes not as a substitute Age Ideal age 3 years 29 Reliability MTBF 14 000 20 000 21 Positioning Pfmn5 3 size 14 7 9 High tech Positioning Pfmn 12 3 size 7 7 33 Age Ideal age 0 years 29 Price 25 45 25 Reliability MTBF 17 000 23 000 13 Attractiveness Score represent market research that has been done for you and provided for your use In Foundation you will never have to create an attractiveness score it will be provided for you by the simulation Customer Survey Score Is created using the number of points assigned as an attractiveness score for each category in Foundation those 4 are Age Positioning Price and Reliability and cross multiplying those numbers by the percentage of importance that has been assigned As you can see above the importance of each category varies by market segment The total number after going through that process is the CSS for that product Sales budget and Accessibility When you spend money in your sales budget you are increasing the accessibility of your product But more is not always better due to the law of diminishing returns which states that after a certain point you will get less of an outcome regardless of how much input money in this case that you re putting into the process On this note it is very challenging to get a CSS score of 100 Promotion budget and Awareness When you spend money in your promotion budget you are increasing customer awareness about your product Like with accessibility more is not always better and the law of diminishing returns is still effect It is easier to get a CSS score of 100 in this area though Adjusting CSS for Awareness and Accessibility If you get a score that says 70 of customers got your promotional materials and are aware of your product that does not accurately reflect what percent of customers are aware of your product In reality half of the remaining percentage of possible customers in this case 100 70 30 unaware customers will have searched and found your product on their own So a more realistic percentage would be found by taking the 70 and adding half 15 of the unaware customers to get 85 awareness So when adjusting your promotion and sales budgets you want to reach the remaining 15 of potential customers II Lecture Buyer s and Seller s Markets Understanding these two types of markets and their implications is helpful for sales forecasts and production planning Buyer s and Seller s markets represent the relationship between supply of product and the demand for that product These markets can be challenging for businesses to predict and adjust to Seller s Market The characteristics of a seller s market are Limited supply of product occurs due to stock outs where companies run out of inventory to sell Customers search for any available products and reduce their product and price expectations Sellers have the opportunity to sell less appealing products Products priced up to 9 99 above the price range will still sell in a seller s market in Foundation A seller s market will change how you forecast your sales for the forthcoming year Buyer s Market The characteristics of a buyer s market are Plenty of product available Customers are very selective Sellers must make products as appealing as possible and within the standard price range Sales volume will decrease 10 for every dollar over the price range A buyer s market may be more predictable based on demand market share forecasting and customer buying behavior How can you tell which market you have A seller s market will have actual sales that are less than demanded sales A buyer s market will have actual sales and demanded sales that are equal Sales forecasting Sales forecasting can be a difficult job and is definitely not a job for everyone There are four main techniques used to forecast sales 1 Market Growth estimate Market share estimate Counting products December CSS method Market growth estimate For each product take the number of products sold and increase by the growth rate of the market segment If a product sells in both segments high and low tech do the numbers separately and then add them together for your final forecast If you and your competitors all serve your customers exactly as well as you did last year the market growth estimate would be accurate This is not a very realistic prospect however so the market growth estimate is of limited usefulness 2 Market share estimate Take the total industry unit demand for each segment of the market for last year and increase by the appropriate growth rate 10 for the low tech segment 20 for the high tech Multiply the resulting number by the potential market share percentage of the company This gives you your potential share estimate 3 Counting products This technique is helpful when there is little information available about your product such as when you are introducing an entirely new product First count the number of products that are competing in the same market segment Assume that each product will get equal market shares The result is your projected market share for the upcoming year This is not the most detailed or realistic forecast but it is better than no information at all 4 December customer survey score DCS method First you have your product