Over the past three weeks in the University of Phoenix Marketing Management class, I have completed three simulations based on real life marketing situations. The first simulation was titled, "Forecasting Market Demand." This simulation discussed the importance of determining the future demand for your product in the voice commanded software industry. The marketing team for the new Listensoft software needed to accurately forecast the production capacity of the new product and the pricing strategy. This task is especially difficult because human behavior is difficult to predict. Forecasting behavior "
is about generating numbers out of expectations, opinions, statements, prior patterns and a host of other subjective elements" (Forecasting Market Demand, 2005). The second simulation was titled "Service Added Based Differentiation." This simulation discussed the importance of differentiating the new Camyo sports car in a mature market to increase sales and profitability. The current sales were 75,000 units per year, which was only 7% of the market share. The goal for the marketing team was to increase double the sales of this automobile within three years, while still maintaining 5-8% profitability.
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...
References: Channel Development and Pricing. (2005). Retrieved Nov. 21, 2005, from University of Phoenix MKT 551 eResource page.
Forecasting market demand simulation. (2005). Retrieved Nov. 21, 2005, from University of Phoenix MKT 551 eResource page.
Kalakota, R. (n.d.). Do or die: market segmentation and product positioning on the . Retrieved Nov. 21, 2005, from http://crec.mccombs.utexas.edu/res/articles/segmentation.html Web site: .
Kern, R.A., Hartley, S.W., Berkowitz, E.N, Rudelius, W., (2005). Marketing. [University of Phoenix Custom Edition e-text]. The McGraw-Hill Companies. Retrieved October 26, 2005 from University of Phoenix, Resource, MKT/551 – Marketing Management Web site: https://ecampus.phoenix.edu/secure/resource/resource.asp
Service Added Based Differentiation. (2005). Retrieved Nov. 21, 2005, from University of Phoenix MKT 551 eResource page.
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