Historical market and performance datain planning - Sales Management

Earlier Figure referred to the importance of using available historical market and performance data in market planning. This is expanded in Figure , which shows a typical range of market data that might be available and useful in framing the sales and marketing plan. Estimates should be made or obtained(from desk research) into the total market for the product category, so that you have estimates of the total market for your products,rather than looking at your own sales in isolation.

Your own distribution should be compared with that of your competitors, as a measure of the effectiveness of your sales team, and asa guide to the suitability of your product sand prices to market needs. You will want to know about market pricing structures to ensure your competitiveness and positioning correctly in relation to competitors’products and your strategic marketing objectives.

It is essential to know trade margins at each level of the distribution chain if you are to control market prices. Many suppliers do not have much influence over the market pricing of their products, in part because of lack of knowledge of market pricing structures and in part because of the absence of any control over their trade distributors(where a product is re-sold rather than purchased for use directly by end users).

Your historical performance in sales and distribution achievements may provide an important insight as to how you might perform in the future, and how effective your sales team might be in implementing your marketing strategies and plans.

Historical-market-and-performance-data-for-use-in-planningHistorical-market-and-performance-data-for-use-in-planning1

Key planning assumptions

There are a number of aspects of planning where we might make assumptions, as illustrate din Figure.

Market size

Under this heading, when making assumptions or projections based upon assumptions,the marketer will be looking for information relating to product volumes and values within relevant product categories or substitute products. Also he or she will want any information about distributors of the product category, such as how many distributors or distribution points are estimated to cover the market, and their estimated sales volumes. It will also be useful to know the numbers of users or consumers in the target market segments,and their likely level of use or demand for the product.

Market dynamics

This is about the changes that are taking place in the product sector and distribution channels, independently of the supplier. For example, users or consumers may be demanding higher quality products with greater reliability and lower servicing needs. Or there may be a move towards higher(value-added) or lower (basic commodity type) priced products. Consumers might be pressuring for more variety in products (such as car models with a greater range of options), or there might be movements infuser or consumer product preferences, such as the move in recent years towards more environmentally friendly and natural products.

Looking at distribution channel dynamics,these are constantly changing. Suppliers merge with other suppliers, with objectives of strengthening market positions. New suppliers enter markets to service niche needs. In consumer goods the retail market is dynamic,with new outlet formats servicing customer needs, e.g. the move to out of town shopping locations.

Key-assumptions-in-planning

Spend

The market plan must make assumptions about the users’ or consumers’ spending power. Some products are essential either as industrial components or consumer necessities,and others are discretionary if funds permit purchase. The availability of disposable funds to use on the products may be a critical factor in purchase decisions. High interest rates may discourage investment in capital goods. High unemployment may discourage consumer spending on non-essentials.

Knowledge of the state of the local market economy will assist in making sensible planning assumptions.

Organization changes

In some situations there may be a need to consider likely changes in either the marketer’sown company organization, or in that of his or her market distributors. Internal company re-organizations might impact on markets and planning. Whatever company organizational changes occur, if they are likely to impact on performance then assumptions must be made at the planning stage and factored into plans.

Parallel activity

In some product categories it is quite common for marketers to find a significant level of parallel trade. This is trade that is not officially sanctioned or managed by the supplying company, normally by-passing official distribution channels, and possibly even including smuggling operations. Parallel trade normally develops where there are onerous duties or taxes or where a company fails to supply (for whatever reason) sufficient goods to meet market demand, or where there are significant price differentials between markets.

Goods exported from the home market may return through opportunistic traders if they can be purchased abroad and re-imported more cheaply. The effect of parallel trade is quite disruptive to orderly marketing, particularly of branded goods, and can often result in the same products selling at differing price levels through the alternative distribution channels.

When it comes to market planning, if the marketer’s products or markets attract parallel trade then this must not be ignored, but factored into plans, and estimates made both of its magnitude and of its effect on orderly marketing.


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