Chapter 9 – SALES FORECASTING AND FINANCIAL ANALYSIS

What are some of the reasons why financial analysis for new products is difficult?

developing a reasonable sales forecast, especially for a very new product based on rapidly advancing technology.

•Example: Forecasting the demand for satellite radio

What are some considerations to keep in mind when developing sales forecasts?

1.A product’s potential may be high, but salesmay not materialize because of poor marketing efforts.

2.Products initially go through a period of sales growth, but sales eventually stabilize over time.

3.Sales will also depend on our competitor’s strategies and programs as well as our own.

How is forecasting done using Purchase Intentions from concept testing?

Example: Hand Cleanser from Ch. 9)

How is forecasting done using the A-T-A-R Model?

Formula:    MS = T x R x AW x AV

Where:

   MS = long-run market share

   T = ultimate long-run trial rate (the percentage    of all          buyers who ultimately try the product at least          once)

   R = ultimate long-run repeat purchase rate (share of           purchases of the product among those who tried           the product)

   AW = percent awareness

   AV = percent availability

 

What is diffusion of innovations?

Diffusion is the process by which an innovation spreads through the population.

What are the 5 categories of adopters

–Innovators = first to adopt

–Early adopters = next to adopt

–Early Majority = next after that

–Late Majority = next after that

–Laggards = last to adopt

What does the Life Cycle of Assessment recommend about financial analysis?

–Innovators = first to adopt

–Early adopters = next to adopt

–Early Majority = next after that

–Late Majority = next after that

–Laggards = last to adopt