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Welcome to this class, I have taken here the example of this organization DUPONT to
illustrate to you how this product management, market management organization or the
When you look at this organization DUPONT, you can see that, you can see that there is
there are product managers for RAYON, ACETATE, NYLON, ORLON, DACRON
different product managers for different products, but when it comes to market managers
you may have a market manager for menswear, you may have a market manager for
women’s wear, you may have a market manager for home furnishings, you may have a
market manager for the industrial markets.
This is how the product manager and the market managers they get differentiated. A
product managers with respect to the particular product range you are having some
things coming out from RYAN, some things coming out from ACETATE, some things
coming out from NYLON, then ORLON, then DACRON, but the market managers with
reference to the end products, it can be with respect to menswear women’s wear or home
furnishings or industrial markets.
Now, let us say you are interested in sales forecasting then what are the things which you
should be doing you should be able to do an environmental forecast. What is this
environmental forecast? You must be able to project inflation. If you look at the Indian
economy, though the economy they say it is not doing very good. The plus point is that
inflation is under check it is under control. In other words, there is no runaway increases
If you saw very recently the onion prices went up, it went up to more than 80 rupees then
the government stepped in to stop the export of these onions and took other corrective
measures like putting a tax on the import of onions that is extra tariff on the imports also.
That this desire to have them imported is reduced. You had a scenario where your onion
prices was just running amok.
Now, thanks to many of the steps taken and also the crops which have come about the
price of onions has more or less stabilized between 35 to 40 rupees and it is expected that
it will come down further. You must be able to also find out what is going to be the
employment trends suppose you are looking at skilled employment to get a skilled
analytics person or a data science person in the Indian market is tough even to this day.
It is not easily possible, it is tough even in the American market; the result is all these
people are in high demand they get paid very high. If you look at the interest rates, this is
going to influence your sales. Suppose he has to borrow loan to take purchase your
product, the consumer looks at what rate he has to pay interest on this loan.
That is why if you really see the Indian economy the Indian economy the controller of
these whole operations that is a Reserve Bank of India which is the central bank what did
it do it brought down the interest rates cut by so many basis points every time every
quarter. If you are seeing it is coming down by 25 basic points pps the result is with rest.
When you bring it down the RBI expects that these cutting interest rates to be passed on
to consumers by the banks concerned that is a PSUS or the private banks like the HDFC
or the ICICI. So, that you are lend the interest rate on lending comes down. Now, we are
seeing that the home loan interest rates have also come down, the vehicle interest loan
interest rates have also come down.
Now, what is the reason for doing all this, you are expecting that by doing all this the
consumer will be interested in going in for purchase of these types of products whether it
is automobiles or whether it is the homes. If you really see in a city like Bangalore, the
report suggests that more than 50 percent of the flats which are produced or which are
constructed by different builders are not occupied that is they are not sold.
There may be so many reasons for that, but this is the way this forecast goes. Suppose
you are a builder and you constructed some 20 flats and when you constructed 20 flats
you find that there are no takers for these flats then you will be out of business. These are
the things which you should be guarding about very strongly and this environmental
forecast helps you to do that.
When will a consumer be interested in spending? He will be interested in spending on
products which are not essential only when there is sufficient saving with him. Suppose
he is not able to afford for his basic necessities like food, clothing and shelter then you
ask him to take an automobile. It is unthinkable that he will go in for an automobile.
First, he has to ensure that his home runs properly and then only all these other
investments on different products can be thought of.
The government if you really see is taking so many steps so that the spending can
increase that is how your GDP all those types of things, there can be increase in your
GDP and if there are so many spending avenues which you can create and it comes about
then there can be increase in your tax collection. When there is increasing in your tax
collection the revenues of the government is likely to increase.
When the revenues of the government is likely to increase you can expect money to be
invested on people welfare or people welfare projects, maybe it is your roads or
construction of toilets or whatever all these things the government can think of spending.
This is where when you are looking at the interest rates, the business investment that
climate is going to get affected. Suppose your borrowing rates in the market are very
high then investments are likely to come down.
Suppose, you say I will tax the foreign investment no foreign and the investment will
come into the market at all. They will just calculate how much tax you have to put in by
investing in India. Then suppose the other thing which comes in is, is the government say
treasury strong enough suppose your government expenditure keeps on going up.
If you look at many of the states in the country the charge is that the states treasury has
become empty with respect to many of the states that is what many of the opposition
political parties keep on telling in different states, saying that states expend treasury has
become empty, result is they cannot take care of any of the situations like drought or
excess rain or all those types of things.
Then the net exports the economy is going to perform well when your exports are likely
to increase, but if your exports are not increasing for so many reasons, if you look at the
industrial output it is falling, it is not increasing. The contribution of the industrial output
to exports is getting seriously impacted. Then other factors of importance to the company
like your GNP forecast that is a gross national product forecast along with other
environmental indicators if you use the GNP, you can forecast the industry sales.
Sales with respect to the entire industry that is to say the entire automotive industry, it is
not something which is confined to you per say, but it is confined to the entire
automotive industry. Then using this industry sales, you can have this industry forecast.
What is going to be the sales for the next this thing? Using this industry forecast, you can
make a company sales forecast.
In order to do the company sales forecast you can go in for opinion survey, you can go in
for market test for buyer response or you can go through past records of buyer behavior
using time series or statistical demand analysis, you can adopt any of these statistical
models. What are these things coming under your opinion survey comes under what
people say about the product.
When you put your product for market testing, what is it that you are doing? The product
is there in the market, you want to find out the response of the potential consumer that is
what people do. You also want to know what people have done in those types of
circumstances with respect to other products. That is what people have done taking the
past records. Using the past records, you would like to know what is the type of impact
you are likely to have on the sales.
(Refer Slide Time: 14:34)
Why do you want to do all this? The question is you should exhibit a control on
marketing. This is going to help you in marketing control, this marketing control can be
done in different methods you can have an annual plan control where you say your sales
analysis, I am going to make use of the tool sales variance analysis.
You may say I would like to look at the annual plan through the prism of sales. This
prism of sales I am going to control. How do I control? I will make use of this tool sales
variance analysis. What is the sales variance analysis? An example can be given here let
us say, you want you have 4000 units at rupees 1 to be sold in the first quarter. Kindly,
note that all these are hypothetical examples which are being given here.
Let us say your you want to sell 4000 units at rupee 1 in the first quarter, this was your
target, but what you actually achieved was only 3000 not at 1, but at rupees 0.80 that is at
80 paisa. Where is a fall? The fall is in two aspects, one is with respect to the number of
units, you are not able to sell 4000, you are able to sell only 3000. Second, there is a fall
also with respect to the revenue that you are going to get through these sales, you
expected 4000 units to fetch you 4000; that is 1 unit to fetch you 1 rupee, but it is not
fetching you 1 rupee it is getting fetching you only 0.81, 0.8 rupees, 0.8 rupees that is 80
There is a variance due to price decline, there is a variance due to volume decline. So,
what is the variance in price decline? It is 1 minus 0.80 multiplied by 3000 that is rupees
600, 37.5 percent is the contributing to this variance. Then there is a volume decline, you
wanted 4000 units to be sold, but 4000 units is not getting sold you are not able to see
you are able to sell only 3000. Your variance due to volume decline is given by 1 into
4000 minus 3000 giving you 1000 rupees with respect to volume decline variance that is
contributing to 62.5 percent.
The total of these two put together is 1600 contributing to 100 percent. You may do a
more in-depth analysis after getting these figures this is called micro-sales analysis. You
got the total picture where your sales, you expected it to be at 4000, but not happening at
4000, you expected 4000 units to be sold at rupee 1 per unit, but you are only able to sell
3000 at 0.8.
The result is there is a variance due to price decline, there is a variance due to volume
decline. You may like to know where has been these variances very prominent. Which
territories is the south doing well, is the west also doing well, is the problem with respect
to the north and the east? Many times’, most of the automotive sales, If you really see
territory wise they have suffered in certain territories east has consistently not given them
the sales that they expected.
The sales are coming from two regions very strongly that is the south and the west then
followed by the north, then followed by the east. The job of the marketing manager is to
do first the sales analysis for the entire country then do a micro sales analysis for each
territory consider each territory.
Then after doing all this he resorts to what is called a market share analysis. What is this
market share analysis? The types of measures he can take. Suppose it is an overall
market share, how do you get this. It may be percentage of total industry sales that is
your industry sales was let us say 100 and your sales was let us say 10 that is you are
having 10 percent, percentage of total industry sales.
Then what is the server market share that is how much you have served. Maybe, you
served the south very strongly, but not able to capture the full south market. It is not 100
percent also in the south. Maybe, you are at 80 percent in the south, your percentages
may be falling when you are looking at other territories. Then you may like to do what is
called the relative market share analysis measure.
You may like to compare yourself with respect to the competitors, where am I faring
with respect to the competitors in a marketplace. Generally, they take the top three
competitors. Suppose you are at more than 33 percent then you are strong in a market
place, you are strong in a market place.
Suppose your market share is not that strong that is then you have cause to worry. This
strong relative market share is always with respect to the leading competitor. Suppose
your leading competitor was let us say at 100 and you are at say let us say 40, no
problem still you are doing well in the marketplace. This is what you normally do when
you take these different types of measures in a marketplace.
(Refer Slide Time: 22:44)
Then the overall market share can also be calculated by a formula. What is the type of
formula? It is customer penetration multiplied by customer loyalty multiplied by
customer selectivity multiplied by price selectivity. What is this percentage customer
penetration that is percentage of all customers who this company who buy from the
Then what is customer loyalty? That customer loyalty is purchase from this company as
percentage of total purchase. What is customer selectivity? Size of the average customer
percentage from the company. What is this price selectivity? Average price by this
If you multiply all this you are likely to get your total market overall market share. When
you get this, this is what the marketing manager always does, he does this type of
analysis on a very regular basis. He may adopt different measures. And what is the end
the result he wants to get, he wants to get the end result with respect to the market shares
and the sales that has been registered, ok.