BA 101 1st Edition Lecture 5Outline of Last Lecture1. FoundationA. Constructing a CSS score2. Lecture: Marketing strategy and decisionsOutline of Current Lecture I. Announcements + admin II. Lecture: Buyer’s and seller’s marketsIII. Sales forecasting methods, insights, and techniquesCurrent LectureI. 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.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 criteriaExpectations importanceLow tech: 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 howmuch 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. Sowhen adjusting your promotion and sales budgets, you want to reach the remaining 15% of potential customers. II. Lecture: Buyer’s and Seller’s MarketsUnderstanding 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 FoundationA 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 rangeA 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:- Market Growth estimate- Market share estimate- Counting products- December CSS method1. Market growth estimateFor 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