Market Outlooks Simbrand

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PRACTICE ROUND
European demand is already at a good level. The annual demand growth is estimated to be between 30 and 100% annually, depending on the segment. In the Asian market the demand level currently is low, but the growth is expected to be even higher than in Europe. In both Europe and Asia the growth will be fastest during the next couple of years, after which the growth is likely to slow down. In any case, the consensus among analysts is that the growth rates will be positive for several years to come.

The high-end segments in both the consumer and company segments play a major role in the first years. Later on, with market penetration, the low-end segments might well dominate the sales volumes.

Because PDAs are still rather unfamiliar products especially among low-end segments, and since the companies are new and thus unknown, it is important to think carefully about advertising and channel investment decisions. Advertising and channel investments have a long-term effect on demand and therefore, it might be rather risky to neglect these areas of the marketing mix completely.

Finally, the group’s financial officers as well as executives of the production company have emphasized the importance of accurate sales forecasts. Budgets are useless if forecasted sales are far from reality, which usually decreases the quality of decisions significantly. In addition, production facilities’ output is preliminarily planned according to the forecasts. Large adjustments required in case of poor forecasts result in increased unit costs.

ROUND 1
European demand is already at a good level. The annual demand growth is estimated to be between 30 and 100% annually, depending on the segment. In the Asian market the demand level currently is low, but the growth is expected to be even higher than in Europe. In both Europe and Asia the growth will be fastest during the next couple of years, after which the growth is likely to slow down. In any case, the consensus among analysts is that the growth rates will be positive for several years to come.

The high-end segments in both the consumer and company segments play a major role in the first years. Later on, with market penetration, the low-end segments might well dominate the sales volumes.

Because PDAs are still rather unfamiliar products especially among low-end segments, and since the companies are new and thus unknown, it is important to think carefully about advertising and channel investment decisions. Advertising and channel investments have a long-term effect on demand and therefore, it might be rather risky to neglect these areas of the marketing mix completely.

Finally, the group’s financial officers as well as executives of the production company have emphasized the importance of accurate sales forecasts. Budgets are useless if forecasted sales are far from reality, which usually decreases the quality of decisions significantly. In addition, production facilities’ output is preliminarily planned according to the forecasts. Large adjustments required in case of poor forecasts result in increased unit costs.

ROUND 2

The total sales of PDAs in Europe are expected to grow hundreds of %. Growth will be fastest among the low-end segments. However, the price elasticity of these segments is rather high and thus the availability of cheaper models with reasonable features has a significant impact on the realized growth. The demand growth estimates for Asia seem even more promising than for Europe. In Asia, the market is still clearly dominated by high-end segments. By offering new high-tech models the companies can create more demand.

Competence indices started to grow from the starting point of 100 but some analysts are waiting to see products with compactness and battery life ranging in between 105 - 110 this year. However, the production line cost of 3.5 M€ is high considering the rather small size of the markets at the moment. This will certainly limit...
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