The final simulation completed was "Channel Development and Pricing." This simulation discussed the effectiveness of distribution channels and analyzed the importance of pricing to impact sales while expanding the Add Computers market share globally. Add Computers was looking to expand their retail and distribution market to include the sale of notebook computers in England. Currently before launching this product the notebook market in England encompassed 2 million units per year sold. Add Computers was estimating the first year of launching the computers in the United Kingdom would yield sales of 160,000 units. This would give Add Computers a market share of 8% while maintaining a 6% profit margin.
Forecasting Market Demand
My results for this simulation were exceptional during the first year of forecasting, however my ability declined the following two years. The first year I forecasted the sale of 100,000 units. This forecast was only 2,000 units short from the actual yearly sales. The reduction in the price to $225.00 per unit enabled me to almost reach this goal. Basic microeconomic principles show that a decrease in price in most cases will initiate an increase in sales. This forecasting was successful in the introductory stage of the product life cycle. The second year I failed to accurately forecast the sales to the physicians market. I was much closer with determining the sales to the IT departments and banking industry. The sales for the doctors I determined would be 50,000, however actual sales greatly exceeded that number by 19,500 totaling 69,500 units sold. The third year also I was focusing on the micro not macro economical principles, and missed the mark of sales when we decided to incorporate our software into OEM computers. I should have also considered the original product was within the maturity stages, and then we added a new distribution which therefore the demand for this product was much higher.
Forecasting the market demand of a new product or service is very difficult. As this simulation has shown, the introduction of a new product into the market place involves careful determination of sales forecasting and pricing strategy. The Marketing audit my group is completing is introducing a new voice activated system into the CSX transportation system. Within our marketing audit, no product is being monetarily sold, however this simulation shows the need to forecast the demand for this item. We need to forecast the demand to ensure that the internal CSX customer or employee is able to receive software and training for this program should their position require it.
The individual marketing plan I am completing directly relates to this simulation on many fronts. First, I am opening up a new...