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Strategic Tools & Forecasting

Strategic Tools & Forecasting. Profit Impact of Marketing Strategy (PIMS). Cross-sectional study of the strategic experience of profit organizations based on the experience of more than 500 companies in nearly 3,800 businesses.

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Strategic Tools & Forecasting

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  1. Strategic Tools & Forecasting

  2. Profit Impact of Marketing Strategy (PIMS) • Cross-sectional study of the strategic experience of profit organizations based on the experience of more than 500 companies in nearly 3,800 businesses. • Can use the information to develop a model to estimate a business’s ROI from the structural competitive/strategy factors associated with the business. • Some of Buzzell and Gale’s strategy principles based on PIMS research: • Quality is the single most important factor affecting performance • Larger market share equals higher ROI • High investment intensity pulls down profitability • Forecasts of cash flow based solely on the growth-share matrix are often misleading

  3. Trend-Impact Analysis • A method for projecting future trends from information gathered on past behavior. 1. Use computer to extrapolate past history. 2. Have experts indicate future events that may have a bearing on the trend and use this information to modify the extrapolation. 3. Have experts review the modified extrapolation and adjust where necessary.

  4. Cross-Impact Analysis • Provides a future forecast, making due allowance for the effect of interacting forces on the shape of things to come.

  5. Survey of Buyer Intentions • Ask individual accounts about their purchasing plans for a future period and translate these responses into account forecasts. • Mail surveys • Telephone surveys • Personal interviews, etc.

  6. Jury of Executive Opinion • Experts in the firm provide forecasts. The forecasts are then averaged or discussed by the manages until a consensus forecast for each account is reached.

  7. Delphi Technique • Method of making forecasts based on expert opinion. 1. Identify recognized experts (e.g., company executives) in the field of interest. 2. Seek their cooperation and send them a summary paper o the topic being examined. 3. Conduct personal interviews with each expert based on a structured questionnaire.

  8. Salesforce Composite Method • Salespeople provide forecasts for their assigned accounts.

  9. Moving Averages • A forecast is developed by calculating the average company sales for previous years.

  10. Decomposition Method • Breakdown previous company sales data into four major components: trend, cycle, seasonal, and erratic events. These components are then reincorporated to produce the sales forecast.

  11. A Basic Approach to Sales Forecasting Total number of people in target markets [a] a Annual number of purchases per person [b] x b Total potential market [c] = c Total potential market [c] c Percent of total market coverage [d] x d Total available market [e] = e Total available market [e] e Expected market share [f] x f Sales forecast (in units) [g] = g Sales forecast (in units) [g] g Price [h] x h Sales forecast (in dollars) [i] = i

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