Measuring and Forecasting Markets

"Market measurement and forecasting skills are an essential requirement for formulating marketing objectives and plans."

As Kotler discusses in Chapter 2, the two criteria for market attractiveness to organisations are; i) market size and ii) market growth.

Measuring the market size accurately and precisely are important skills for the marketer. Kotler provides a model on page 257, that provides 90 different types of demand estimates for a market size that an organisation could use; Kotler's model has three dimensions, i) product level, ii) space/territory level and iii) time. 

"Market demand for a product is the total volume that would be bought by a defined customer group in a defined geographical area in a defined time period in a defined marketing environment under a defined marketing program."

This clearly shows how complex market measurement can be and that as marketers, we must embrace all of these areas to fully understand what we mean when we say that a market size is x.

Measuring market share is relativley easy when you know the actual size of the market. Forecasting future market share is discussed by Kotler and he provides some interesting modelling based on relative marketing expenditure values. I think that these are now outdated as we have moved into an era where digital can provide us with more accurate means to predict future sales and market shares.

The chapter goes onto discuss forecasting future market sizes - again, an important element for the marketer when developing a marketing plan over one, three and five years.

In my experience, knowing the size of the defined market and what share each organisation has, is critical when developing marketing objectives and strategies. Being as precise as possible with market definitions, market size measurements and market shares, is one important part of the process of developing strategies for growth, i.e. if the market is static, market growth will come from stealing market share from a competitor - which one(s) and how ? then follow.