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Marketing Performance Tools and Application Exercises
3.1 Market Potential and Market Development Index:Figure 3-3 is used with this marketing performance
tool in responding to items A (below) and B (next page).
A. How would the market potential and market development indexes change if each person had an
average of 1.25 personal computers, that is, every fourth person had two personal computers?
Teaching Note:As shown, the market potential in total units grows from 350 million to 438 million per
You could ask students, how would the average price have to change to make this possible? You could
Market-Based Management Copyright © 2012
Sixth Edition –11– Pearson Education, Inc.
Instructor’s Manual– Chapter 2 Publishing as Prentice Hall
B. Estimate the worldwide market potential for soft drinks. Make any assumptions you believe are
reasonable.
Teaching Note:Estimating the market potential for a product like soft drinks is an excellent marketing
In this case, I would estimate that of the world’s population, 5 billion people could buy this product but
only 80 percent would actually purchase it. A purchase rate of 100 percent would have 4 billion
The U.S. average annual consumption rate is 365 cans per person. In the U.S., the estimate of 12 units
per person is considerably lower. This is where the analysis exercise could be used to ask a variety of
Market-Based Management Copyright © 2012
Sixth Edition –12– Pearson Education, Inc.
Instructor’s Manual– Chapter 2 Publishing as Prentice Hall
3.2 Market Share Management: Figure 3-16is used with this marketing performance tool to answer questions
A (below) and B (next page).
A. How much would the market share index and share development index change if product
attractive-ness could be improved from 45percent to 60 percent with more effective advertising?
Teaching Note:Increasing product awareness from 45 to 60 percent would allow the market share
Market-Based Management Copyright © 2012
Sixth Edition –13– Pearson Education, Inc.
Instructor’s Manual– Chapter 2 Publishing as Prentice Hall
B. How much would the market share index and market SDI change if product availability could be
improved from75 to 80 percent?
Teaching Note:Improving the rate of product purchase from 75 to 80 percent would allow the market
share index to increase from 10 to 10.7 percent. The share development index would increase from 41
3.3 Product Life-Cycle Profits: Figure 3-15 is used with this marketing performance tool to answer questions
A and B on the next page.
Market-Based Management Copyright © 2012
Sixth Edition –14– Pearson Education, Inc.
Instructor’s Manual– Chapter 2 Publishing as Prentice Hall
A. How would product life-cycle profit change if the market grew at a slower rate between 2010 and 2015
such that in 2015 market demand would be 375million units?
Teaching Note:A lower rate of growth between 2010 and 2015 would lower industry sales by $24
B. What would be the impact on product life-cycle profits be if the average selling price dropped to $850
by 2015 and percent margins dropped to 13 percent?
Market-Based Management Copyright © 2012
Sixth Edition –15– Pearson Education, Inc.
Instructor’s Manual– Chapter 2 Publishing as Prentice Hall
Teaching Note:The drop in the average selling price and percent margins would have a major impact
3.4 Sales Forecasting:Figure 3-20 is used with this marketing performance tool to answer questions A (next
page) and B (page 40).
Market-Based Management Copyright © 2012
Sixth Edition –16– Pearson Education, Inc.
Instructor’s Manual– Chapter 2 Publishing as Prentice Hall
A. How would sales and the market development index change when sales growth is adjusted downward
to 3 percent annually?
Teaching Note:The lower rate of growth would reduce future market demand and lower the market
Market-Based Management Copyright © 2012
Sixth Edition –17– Pearson Education, Inc.
Instructor’s Manual– Chapter 2 Publishing as Prentice Hall
B. What would be the sales impact if the business could hold prices at1,000 per unit over the 3-year
planning period but lost 0.5 share points each year?
Teaching Note:Holding price at $1,000 at the expense of losing 0.5 percent market share each year
Market-Based Management Copyright © 2012
Sixth Edition –18– Pearson Education, Inc.
Instructor’s Manual– Chapter 2 Publishing as Prentice Hall
