Branding and Marketing

There’s a bit of confusion mostly in the inter-change of functions of marketing and branding.  Any business always has marketing embedded in their corporate structure but few has brand management incorporate in their companies.  How important is branding and is it really a necessity to have such a department or could it just be included as a sub-classification under their marketing department.

For all multinational companies that gives so much importance and value to their market position, branding is very important, equally if not more important than marketing.  Their corporate brands are considered as an asset that needs to be protected and retain market position thru the efforts of marketing avenues.

Here we differentiate and delve into the two contrasting and yet parallel world of branding and marketing, what makes one equally important in any company organizational structure.

Branding is strategic. Marketing is tactical.

Marketing may contribute to a brand, but the brand is bigger than any particular marketing effort. The brand is what remains after the marketing has swept through the room. It’s what sticks in your mind associated with a product, service, or organization—whether or not, at that particular moment, you bought or did not buy.

The brand is ultimately what determines if you will become a loyal customer or not. The marketing may convince you to buy a particular Toyota, and maybe it’s the first foreign car you ever owned, but it is the brand that will determine if you will only buy Toyotas for the rest of your life.

The brand is built from many things. Very important among these things is the lived experience of the brand. Did that gadget deliver on its brand promise of reliability? Did the maker continue to uphold the quality standards that made them what they are? Did the sales guy or the service center mechanic know what they were talking about?

Marketing unearths and activates buyers. Branding makes loyal customers, advocates, even evangelists, out of those who buy.

This works the same way for all types of businesses and organizations. All organizations must sell (including nonprofits). How they sell may differ, and everyone in an organization is, with their every action, either constructing or deconstructing the brand. Every thought, every action, every policy, every ad, every marketing promotion has the effect of either inspiring or deterring brand loyalty in whomever is exposed to it. All of this affects sales.

Branding is as vital to the success of a business or nonprofit as having financial coherence, having a vision for the future, or having quality employees.

It is the essential foundation for a successful operation. So yes, it’s a cost center, like good employees, financial experts, and business or organizational innovators are. They are cost centers, but what is REALLY costly is not to have them, or to have substandard ones.

Marketing vs Branding

There is a spectrum of opinions here, but in my view, marketing is actively promoting a product or service. It’s a push tactic. It’s pushing out a message to get sales results: “Buy our product because it’s better than theirs.” (Or because it’s cool, or because this celebrity likes it, or because you have this problem and this thing will fix it, etc.) This is oversimplification, but that’s it in a nutshell.  This is MARKETING.

Branding on the other hand, should both precede and underlie any marketing effort. Branding is not push, but pull. Branding is the expression of the essential truth or value of an organization, product, or service. It is communication of characteristics, values, and attributes that clarify what this particular brand is and is not.

A brand will help encourage someone to buy a product, and it directly supports whatever sales or marketing activities are in play, but the brand does not explicitly say “buy me.” Instead, it says “This is what I am. This is why I exist. If you agree, if you like me, you can buy me, support me, and recommend me to your friends.”

Is marketing a cost center? Poorly researched and executed marketing activities can certainly be a cost center, but well-researched and well-executed marketing is an investment that pays for itself in sales and brand reinforcement.

Is branding a cost center? On the surface, yes, but the return is loyalty. The return is sales people whose jobs are easier and more effective, employees who stay longer and work harder, customers who become ambassadors and advocates for the organization.

Conclusion

Branding isn’t the same as marketing – branding is the core of your marketing strategy. In order to build an effective brand, you need authenticity and clarity in each of the steps discussed earlier, allowing your target market to identify with your brand personality and values successfully.

One final thing to remember – and a very important point – is that branding isn’t a one-time thing that you do at the beginning of establishing your business. It is an ongoing effort that permeates your processes, your culture, and your development as a business, and it requires your dedication and loyalty in order to reflect in your work. At the end of the day, the true measure of your branding success is in earning loyal customers who become your brand ambassadors as well.

Digital Marketing

The digital space is fast becoming a platform of influence and almost anything can be done in just a click of a button.  We always have the human urge to connect, to stay in touch with our fellow human species, to communicate, share our thoughts, ideas, feelings, even a not so smart comments, it is also being use to do exchanges of goods and services and it is what we call, The digital marketing age. For marketers it is vital knowing where their website visitors are coming from. By measuring the metrics behind it they can decide how to divide their marketing budgets between social media and paid ads on various platforms.

Let’s have a look at what you should know to optimally divide your marketing budgets.

Start by digging into your web analytics tool to see where exactly the traffic to your website is coming from. This information will be of great use to decide on either of these two options:

you can optimize your presence on a social site if that channel already provides a healthy amount of traffic

you can put paid ads on a channel if the visitors are converting at a good rate

Your own marketing efforts will determine which channels you should measure against each other. Let’s take a closer look at three main categories, to help you determine where to put your focus, and why.

1. Social Channels

If one particular channel already refers a large amount of people to your website, you should definitely consider optimizing your presence there. However, it has become quite the challenge to track your niche communities on each channel individually because of the ever-growing number of social channels.

Once you have determined which specific social channel most traffic is coming from, you should determine what it is exactly they find appealing about your content. Based on that knowledge, you can further optimize your content to keep encouraging traffic to your website.

2. Organic Search

Many people in the industry have stated before that search is no longer as important as social. However, in a vast amount of cases, SEO is still driving very successful traffic. If you notice that indeed your brand search is providing traffic that actually converts, then investing in SEO is your way to go.

3. Advertising

When we say ‘advertising’, we can be referring to three things: paid search, display ads and ads on social sites.

To measure the efficiency of paid ads on for example Google or Facebook, you should take into account several metrics. For example, the number of conversions per user of each channel, compared to your investments into that channel.

Due to the diverse amount of marketing options, it’s beneficial to calculate the outcome of each of these traffic sources. If there’s room for experiment in your marketing budget, seize the opportunity and you will have all the insights you need to determine which path to take.

Seven Marketing P's

Marketing Strategy

Every business management and marketing students knows that there are elements of marketing mix and it is better known as the 7 P's Marketing Mix.  Its common sense strategy to know these as an anchor in achieving an effective market penetration in any organization of business.  Be it a small mom and pop store, to online business, to big institutional businesses.  An effective marketing strategy will help you to define the overall direction and goals for your marketing. Your strategy should articulate how you are going to deliver your products or services in ways that will satisfy your customers.

Once you have defined your customers or target market, you need to start developing and implementing tactics or ways to reach them. The marketing mix will make up the tactical elements you will use to carry out your strategy and reach your target market.

Market Tactics

Identify the tactical action steps which will turn your strategy into a reality in your marketing plan, using the guide below. Here are the 7 P's of Marketing:

1. Your product or service

What product or services are you going to offer? Discuss the branding, the packaging (where applicable), and ongoing product or development. You should consider the features and benefits you offer, your unique selling points (What makes your product/service different from everyone else's) and what potential spin-off products of services might be.

2. The pricing of your product or service

Price is a critical part of your marketing mix. Choosing the right price for your products or services will help you to maximize profits and also build strong relationships with your customers. By pricing effectively you will also avoid the serious financial consequences that can occur if you price too low (not enough profit) or too high (not enough sales).

3. Your position (place) in the marketplace

Whether it's a retail store, online shop or on social media, 'place' refers to the channels and locations for distributing your product, related information and support services. This is how you will position your product in the marketplace, it's the location where a product can be purchased. Often referred to as the distribution channel, this can include any physical store (e.g supermarket) as well as virtual stores (e.g eBay) online.

Being in the right location can be a deciding factor in whether a customer buys from you or not. To find out where your ideal customer is buying from it's worth doing some market research.

4. The promotion of your product of service

How do you promote and market your business now (or intend to)? Regardless of how good your business is, if you don’t promote it and tell people you exist, it’s unlikely you will make many sales. Promotion is about attracting the right people to use and reuse your business. There are a number of techniques to use and they can be combined in various ways to create the most cost effective strategy for your needs. This can include online, branding, public relations and advertising.

5. The people in your business (e.g. salespeople, staff)

If you have employees in your business, they can influence the marketing of your products and services. Knowledgeable and friendly staff can contribute to creating satisfied customers, and can provide the unique selling experience that an organisation is often seeking. If an outstanding team provides a competitive advantage, then the quality of recruitment and training becomes essential to achieving your marketing objectives. Make sure you have processes and training in place to get the most out of your team.

6. The process represents the buying experience

Process represents the buying experience the customer gets when they buy your product or service. For example, the way a fine bottle of wine is presented and served in a restaurant, the reaction of a business to a complaint or the speed of delivery in a fast food outlet.A poor process can undermine the other elements of the marketing mix. Budget airlines, for example, may offer very competitive headline prices, but if the final price is inflated by additional charges such as baggage charges and administrative fees, customers may begin to feel they have been taken advantage of.

Try to document your key processes and procedures so your staff and suppliers know what to aim for.  This should include:

• financial
• information technology.

7. The physical environment where the good/services are presented

The physical environment where your products or services are sold and delivered can have a significant impact on how your customers' experience your business. The physical environment can be the quality of the furnishings in your consulting rooms, the design of your reception area or website.

Creating a positive physical environment doesn’t have to be costly – a vase full of fresh flowers or a creative window display can make a big difference.

Branding Defined

You got a business and you’re ready to push your branding online and offline. You are face with the question of How to go about with branding of your products.

You probably think branding involves the following:

● Logos, color schemes, and website design

● Brand identification, links, and social popularity

● SERPs visibility, ad campaigns, and other promotional efforts

You are completely looking at branding the wrong way if you consider the aforementioned as what defines your brand. What I have mentioned are all marketing tools and strategies, and they only scratch the surface of branding.

Difference between marketing and branding?

Marketing is the set of tools and processes promoting your business. This includes SEO, social media, PPC, local search, mobile, and traditional promotional methods and tools. Branding, on the other hand, is the culture itself, the message that permeates and rules all the process of your business.

Misconceptions about Branding

Mixing up marketing and branding is only one of the most common misconceptions about branding that you will encounter. Many businesses and marketers handling branding tasks also make the following misconceptions:

Misconception #1: Branding is marketing / advertising / promotion / anything to that effect.

This is a misconception because branding goes deeper than marketing. Marketing, advertising, and other promotional activities only communicate your brand personality and message. Your brand is comprised of your personality, your voice, and your message; branding is the process of establishing these traits.

Misconception #2: You are the ultimate authority when it comes to your brand.

This is a very common misconception, especially among first-time business owners. The truth is while you set the tone and get the ball rolling for your business, and you set the guidelines that your organization will follow and live by as they work with your brand, this does not automatically make you the ultimate brand authority.

Your customers are the ones who ultimately define your brand. Their perception of your brand is what sticks with the people they influence. This is why it’s very important to select your brand values carefully; otherwise, your brand may be taken the wrong way – or worse, it may fail when you don’t see repeat customers.

Misconception #3: There exists a formula for success when it comes to branding.

Just because everything in online marketing can be measured doesn’t mean everything has a formula. No two companies are alike. While a similar process for developing a brand may work for businesses in the same field, for example, these businesses will still have unique identities and needs.

The truth is that there is no formula – branding is and will always be a customized experience. The good news is you can measure the success of your brand easily. What you should look at in this case is the behavior and the interests of your target audience.

Branding the Right Way

In order to create and establish a strong brand, you’ll need to ask the most fundamental questions behind its development. Before you begin to plan your online marketing strategies, you need to do the following first:

Find your Purpose

The first thing you need to clarify is why you do what you do. You won’t get the answers right away – you’ll need to ask yourself why several times before you get to the root purpose, the very core of your business. Start with questions like:

Why did I build this business?

Why do I want to help out this specific group of people?

Why does it matter to me that these things get done?

As you keep going, note the answers you are giving each “why” – these answers will form your purpose. Walt Disney answers this question very well, and is a good example of a company that knows why they exist: they want to bring joy to children everywhere. This permeates everything that they do.

Choose Your Personality and Voice

After asking why you do what you do, ask yourself: What is my brand? This will help begin to shape your brand, becoming a skeleton on which you will attach the rest of the ideas, values, and messages. At this stage of brand building, ask yourself the following:

What kind of voice do I want to use for my brand?

How do I want to be perceived – do I want to be approachable and casual, corporate and formal, etc.?

Will I be able to stay true to this identity throughout the existence of this brand?

The last question is specifically important because your audiences will be looking for a solid, consistent identity. Your ability to stay true to your brand is one of the most important elements that will earn you customer loyalty.

Outline Your Values

Once you finish asking yourself what you are, it’s time to ask yourself “Who am I?” The values that you get from the previous step will define who you are as a brand. List these down and define these values in light of your business.

Some companies does a great job of outlining and defining their values. They have core values that they live by, and if you go through their blogs and their website, you’ll see these values permeating every process they have. You’ll also notice the people following these values to heart, from the blog posts, to their performance, to their customer service. Defining a good, solid set of values will help you become consistent and serve as your company’s guiding principles for work.

Define Your Culture

Your integrity as an organization depends heavily on the culture you cultivate in your business. Happy employees are productive, passionate, and cohesive, making your business stronger and your processes more easily manageable. This is why it’s important to establish what kind of culture you want to nurture in your establishment.

Google’s culture is very famous for encouraging creativity and innovation by giving their employees time and resources to explore new things. Their 80/20 policy had paved the way for innovations like Google Glass and Android. Although it is not being implemented as a policy anymore, their engineers are still encouraged to take on side projects that allow them to innovate. You can see how the culture lives on despite the fact that the policy has been removed – that’s the power of culture.

Communicate Your Brand

Finally, you get to the point where marketing comes in – you now have to decide how you want to raise awareness about your brand. The previous steps, combined with market research and analysis, will play a huge role in determining how and where you communicate your brand to reach your target audience effectively.

The following will be the most important points to discuss when planning communication strategies:

Your company’s mission statement, which you can easily derive from your purpose;

The benefits your customers will get from your business, which is also answered at the beginning of this process (the answers to the why’s)

Your chosen platforms and the appropriate media for each

Your calls to action – what goals do you have, and how do you plan to entice your audience?

Using Cool in Youth Marketing

Youth Generation is not only driving the nation’s economy, but also its way of thinking. While many brands define the younger generations—Gen Y and Gen Z—as their primary targets, how many brands are actually able to speak their language?

To connect with this target audience, we recognized that coolness finds huge traction with younger generations. To comprehend coolness, it was imperative to understand the elements that make up the sensibility. We delved into the components of coolness, discovering that although one demographics definition of cool do not necessarily translate to other locales, there are quintessential ingredients—we call them “cool mantras”—that are widely accepted indicators of coolness for the youth. The cool mantras in turn infuse brands with their “cool quotient,” or degree of coolness.

To better understand this cool quotient, we looked to brands that have already decoded coolness and made it a part of their brand DNA. By analyzing these brands, we then established a “cool toolkit” to help brands that are still finding their way. Here is an introduction to the cool toolkit for marketers who wish to add a cool quotient to their brands.

The search for cool

After studying more than 100 brands to understand their histories, products, and communication styles, I’ve identified specific brands that are widely considered to be fundamentally cool. This was a relatively subjective classification based on empirical data: Looking at online conversations about brands, considered prior contributions by these brands toward shaping some aspect of youth culture, and determined which brands best resonate with a youth audience. These learnings were then distilled into the cool mantras and shaped into actionable points as part of the cool toolkit to help brands increase their cool quotient.

What makes something cool?

Cool transcends algorithms and logical definitions. Throughout history, cool has resulted from all sorts of different trends and lifestyles. But all things cool, when studied closely, can ultimately be condensed to a few common characteristics. In Asia, these include:

Cool is silent rebellion: Subtle hair highlights or hidden tattoos are symbols of nonconformity that make a statement without shouting.

Cool is a source of respect: Being cool means earning the respect of peers, and sometimes even their envy. Coolness achieves something extraordinary that’s difficult to replicate. Perhaps that’s why the stunt-driven, task-oriented reality show Roadies called its eleventh season “ride for respect.”

Cool seeks detachment but craves attention: Indian youth may plug in their headphones and update their profile pictures by the hour, but they inwardly crave attention while outwardly seeking to look detached.

Cool does more, but talks less: Many brands like Lenovo  bring this truth alive through initiatives that glorify an action-oriented, can-do way of life.

Cool is the equilibrium between individuality and belonging: Stand out too much and you’re weird, blend in too well and you’re inconspicuous. Cool is the perfect balance between these polarities.

Cool is paradoxically competitive: Cool is a ferociously competitive spirit disguised in a nonchalant, unruffled refusal to play the conventional game. Blockbuster movies like Student of the Year bring this duality to the forefront.

Cool creates its own causes: As a generation without central causes or great wars to unite it, India’s youth see movements like lesbian, gay, bisexual, and transgender rights or the Stop Online Piracy Act as causes to rally around.

Finding a cool positioning

Whether a brand is considered cool is also driven by how it is viewed by the people who are not its target audience. This group becomes “the others,” those whose reaction to and viewpoint on a particular brand drives the core target audience to adopt, embrace, or flaunt the brand.

When positioning a brand as the next cool thing, understanding how it will be viewed by people outside the target audience is just as important as considering how the brand will be perceived by the core target audience. These outsiders can love or hate the brand, they can accept it or consider it taboo, but either way, their reactions will impact how the core target audience feels about the brand.

To fully grasp the measure of a brand’s cool quotient and understand the cultural space it occupies, it can help to plot the brand on a positioning chart, considering both the target audience and the outsider’s perspective on the brand. Generally, the target’s perspective and outsider’s perspective are opposite one another.

Since cool is mutable, it’s important to note that brands can move across these quadrants depending on the cultural pulse of the moment. Strategic shifts from one quadrant to another can be brought about by specific activities that focus on reinforcing the brand’s cool image in the following ways:

From generic to distinctive

When a cool brand begins to become generic, it’s time for the brand to do something disruptive to align to its tribe. It’s okay to be hated a little by those outside the brand’s target audience, as this reinforces the brand’s cool image.

From niche to mass

When trying to maintain diehard fans, brands can sometimes become inaccessible to certain audiences, alienating them by pushing them too far outside their comfort zone. This is the time for brands to dial up their desirability and likability quotient with the outsiders.

From passé to the in thing

As culture evolves, brands may suddenly find that their edge has waned—what was once trendy is now ordinary. When this occurs, it’s time to have fun and be a little quirky to break from the sea of sameness.

From “young” to “youth”

There is a difference between those who have a young mindset and those who are young in years. A brand that becomes a symbol of youth often begins to trend with an older crowd. When this happens, it’s time for the brand to do something a little shocking or intriguing to set it apart as a youth brand rather than as a young brand.

The cool mantras: What do Indian youth consider cool?

In our exploration into the world of Indian youth, we discovered that their hyperconnected, socially active, and globally influenced lives have made them quick to judge and unafraid to voice their thoughts. In the process, we uncovered some uniquely Indian characteristics of coolness:

It is cool to pursue your dreams, even if you fail

Inheriting wealth, legacy, or tradition is not considered cool anymore. Youth want to break free and become the authors of their own destinies. We witness this in the rise of campus startups and alternate career options that young people are pursuing, leaving behind often-lucrative family professions for uncertainty and independence.

It is cool to take the lead and change the status quo

The days of Asian citizens being bystanders are coming to a close. There is a growing emphasis on taking the lead and remedying problems. From using technology in constructive ways to raising voices against injustice, the status quo is shifting. People are no longer accepting things as they are or have been, but are looking to the future and focused on change.

It is cool to break taboos

Indian culture has long been riddled with taboos and social distaste for deviation from the norm. But the current crop of youth in India is happy to embrace deviations, even breaking some long-held taboos themselves. Openness to divorce, acceptance of same-sex relationships, and acknowledgement of premarital and extramarital sex are all topics discussed more openly in homes across the country.

It is cool to be social; it’s even cooler to be on social media

Brands like WhatsApp, Facebook, and Twitter have ousted soft drinks as the quintessentially cool brands in India.3 Today in cafés across the country, friends can be seen sitting together hooked into their own electronic devices. The only time the group actually converses is to discuss what was said or done on social media. However, while social media is cool, brands on social media are at best ignored, and more often, lambasted.

It is cool to be hedonistic

Unlike previous generations that believed in abstinence and self-restraint, young India is a hedonistic generation. Whether it’s eating out, going to the movies, or frequenting pubs and discos, the super-fast growth of categories like restaurants, hospitality, multiplexes, and lifestyle goods bears testimony to this fact.

It is cool to be tech-savvy

With a significant share of discretionary spending on tech and tech-enabled services like cellular data, Internet connections, and mobile phones, technology is a clear favorite among the youth. This is also reflected in the fact that Samsung was named the most trusted brand in 2016 and the most exciting brand in the mobile category in a study conducted by the Economic Times.

Content Marketing in my eyeview

Rather than bore your customers with ads, inspire them with content.

People on the Web search for relevant information – content marketing provides it

In today’s digital world, people are inundated with advertisements. As a result, businesses struggle to get their corporate message noticed by consumers. In 2011, a study conducted by the Custom Content Council showed that more than 70 percent of users preferred to get their information from articles rather than from corporate advertisements. Now, to reach their target audience, an increasing number of businesses are relying on a promising new strategy: content marketing.

What is content marketing?

The purpose of online research is to find relevant information and high-quality content. That means that text, imagery and video content have to provide information that is relevant and interesting to people searching for information on the Internet. Content marketing is the practice of creating and distributing content that is entertaining, informative and helpful to potential customers. Good content then directs those customers back to your brand website, where you can capture leads and sell products. Successful content marketing creates positive associations to your brand – without the hassle of product marketing.

Good content endures

Having captured potential customers’ interest, your biggest priority is to continually reinforce the connection between them and your company. Content marketing has an especially long-lasting effect as high-quality content entices users to continue reading, clicking and exploring. A website that has been properly outfitted with good content can potentially generate traffic over the course of months or even years. In addition, Google rewards websites that feature good content with improved rankings in search results.

Content marketing in practice

Looking at this graph, it is clear that the popularity of the search term “content marketing” has risen steeply since 2011.

Because of this increase, many large companies, including giants such as Red Bull and IKEA, have placed their bets on marketing with content. According to a recent survey conducted by the renowned “Content Marketing Institute”, B2B companies in the United States invest, on average, about 30 percent of their marketing budget in content marketing. In addition, an increasing number of smaller and mid-sized companies are taking advantage of opportunities the Web provides for efficient content marketing. Communication channels today are more diverse than ever, meaning there are almost no limits to a publication’s potential reach. Also, it has never been cheaper for a business to publish its own content. For that reason, many companies maintain their own blogs; publish white papers, e-books and infographics; or produce videos to demonstrate their expertise.

The content generated by businesses is as diverse as the types of publication used to circulate it. Web shops offer professional product or purchase advice; members of upper management comment on current developments within the company on the corporate blog; and brand-name product manufacturers publish e-books providing tips on the best way to use the company’s products.

What can content marketing do?

Many marketing decision makers have come to recognize the benefits and efficiency of a good content marketing strategy. According to a study by PR agency Waggener Edstrom Communications, 61 percent of marketers polled noticed increased sales figures after implementing a content marketing strategy. Content marketing also helps businesses to achieve a number of other corporate objectives, including:

Lead generation: If customers are impressed by the content provided, there is a high probability that they will be willing to leave their contact details – whether out of an interest in the product or simply a desire to get to more content.

Increased reach and name recognition: Often, high-quality content that addresses current or controversial topics is disseminated via social networks. By taking advantage of this trend, a company can increase its prominence and reach.

Image development: Releasing high-quality publications on a regular basis allows businesses to establish themselves as thought leaders, which strengthens the corporate brand.

Customer development : Content that offers useful information connects the customer to the company for the long term. By consistently offering good content, companies generate interest in their website and entice users to return.

Checklist for successful Content Marketing:

Checklist for successful Content Marketing: What interests your target audience? From the perspective of content marketing, only content that is truly relevant to a given target audience can contribute to your company achieving its goals.

High-quality content: Well-written, appealing content demonstrates the business’s competence. And it should go without saying that the text be error-free, structured and reader-friendly.

Unique Content: Unique content improves search engine rankings. On the other hand, sites with copied content or content that is of no real use to users is relegated to the back pages.

SEO: Successful online content is not just unique, well-written and focused on a specific target group, it is also search engine optimized with keywords, headlines, clear structure and useful links.

Do you lack the resources to produce high-quality content at scale?

According to the Content Marketing Institute, the biggest challenges facing companies trying to break into content marketing are insufficient time and a lack of opportunities to produce enough content…high-quality, customized content – the foundation of every good content marketing strategy. 

Forecasting is Efficient Planning

Most companies must-haves are good planning and inventory management, this not only applies to retailers, but is also being highly implemented all across different corporate and small business spectrum.  Since overstocking or understocking let say, tissue papers for the company's restrooms, can mean either additional monthly cost above budget if the purchaser overbought these tissues that can be good for 6 months stocks, or lets say for understocking, immediate needs that would require having to purchase to fill in the vacuum of insufficient stocks and this can also arise another additional cost of buying retail to fill the immediate needs rather than buying it on a wholesale price.

Today, I wanna discuss the importance of forecasting, Different companies call the process of forecasting the need for future goods or services different things, demand-forecast, sales forecasting, product forecasting, business planning. No matter what terms are used, market demand, market potential and sales forecasting are inextricably tied together by virtue of the end result - knowing what, how much and when consumers want to purchase goods or services., the ultimate aim is to have cost-savings for the company and result in a more fluid, cost-effective and if not appropriate budgeting.

Market Demand

Demand reflects the willingness of a consumer to purchase a good or service. Market demand reflects the willingness of all consumers within a given market to purchase a good or service. Companies spend millions of dollars on software and experts to help them predict or forecast market demand. Companies forecast market demand because it fluctuates and has an unstable nature. If every company knew exactly how many people would buy a given product or service, the need to forecast market demand would evaporate.

Market Potential

One company selling widgets in a certain market has a certain percentage of that market’s total sales volume. The maximum number of widgets sold by every company that sells widgets in that same market comprises the market potential for widgets in that market. Market potential refers to the maximum sales volume of any given product or service in a given market before the product or service reaches market saturation.

Sales Forecasting

Sales forecasting refers to the process by which a company attempts to predict future market demand of a product or service. Companies typically use historical sales data to predict future market demand. Problems can occur with blindly using historical sales data as a forecast input because at times it does not parallel actual market demand.

Demand vs. Sales

For example, a furniture company makes a very popular dining room set but has constant production issues in manufacturing. Because of these issues, it cannot keep up with demand for the product. At the end of the year, the historical sales data show the company sold 5,000 of the dining room sets between September and December, but the historical sales data misses a vital piece of the demand equation: It doesn’t show the 2,500 dining room sets people came into the store to buy but couldn’t because the company could not produce the goods in time. The additional 2,500 potential sales make the actual market demand 7,500 units (5,000 sold + 2,500 missed sales). If the dining room continued to sell at its current rate and the company only used the 5,000 units as an input to forecast the future market demand, the forecast would fall short during the same time period next year because it does not reflect the actual market demand of 7,500 units. The result leads to loss sales and revenue.

Considerations

Despite being called "sales forecasting," the goal remains forecasting future market demand. This becomes more difficult when trying to forecast new goods or services and the market potential for these new products. Many different forecast methods exist for determining market potential, but as with all forecasts the result is inherently wrong. Whether forecasting market demand or market potential, using clean, accurate and relevant data--human and system-generated--gets the forecasting process off to a good start.