READINGS TEST 2 - forecasting

READINGS TEST 2 - forecasting - READINGS TEST 2...

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READINGS TEST 2 Forecasting (concept evaluation) Pg. 229-232: How to use ATAR to build forecasts.  Understand Logic of the formula and how  they fit together First estimate of the percentage of potential purchasers assumes 100% awareness and  availability (must be adjusted downward) Using ATAR o Can be used to construct a sales or profit forecast o Used largely on consumer packaged goods, where firms have lots of new  product experience on which to develop model parameters and to calibrate the  raw percentages they get from consumers o Basis of many of the simulated test markets o Pseudo sale market testing methods (typically when the physical product is  available for the consumer to take home and try) o Post trial data are then collected from the consumer and used as input to the  ATAr model o Can still be applied using data from other sources and even assumptions o First time product trial might be estimated using the purchase intention method o Accuracy of forecasts obtained depends on the validity of the measures o Must also consider data availability and data precision MS=T x R x AW x AV     T=long run trial rate (percentage of buyers who ultimately try the product at least  once) R=long run repeat purchase rate (share of purchases of the product among those  who tried the product) Obtained by analogy to similar products for which data is available Also calculated using a switching model (estimates long run repeat purchase  rate) Rs is proportion of customers who will switch to the new product when  available Rr is those that will repeat AW = percent awareness AV = percent availability Pg. 233: Product diffusion (no formula)
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Diffusion of innovation – refers to the process by which an innovation is spread within a  market, over time and over categories of adopters Individuals in the earlier adopter categories influence the purchase behaviors of later  ones, through word of mouth and other influence processes Rate of diffusion is hard to assess, especially at early stages
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