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Demand Forecasting & its need for the Project
Research method
Research Methodology
DATA Collection Method, Analysis & Implementation
Marketing
-Marketing Planning-mission
-Marketing Planning-vision & values
Market Analysis –Defining the market
-Types of Market
Market Research –Introduction
-Market Segmentation
-Why segment the market?
Product –Introduction
-Product Life Cycle
Product Analysis
Customer or Consumer
Competitor Analysis kind of information
-Role of competitor analysis
Pricing –Introduction
Brand
Demand Analysis of BHEL Products & Forecasting
-Total demand of products in domestic market
-Analysis of demand in domestic market
SWOT Analysis of BHEL
Findings
Limitations
Conclusion
Recommendation & Suggestions
Websites visited
Bibliography
PROJECT INDEX
DEMAND FORECASTING
'Demand Forecasting is the activity of estimating the quantity of a
product or service that consumers will purchase. Demand forecasting involves techniques including both informal methods, such as educated
guesses, and quantitative methods, such as the use of historical sales
data or current data from test markets. Demand forecasting may be used in making pricing decisions, in assessing future capacity requirements,
or in making decisions on whether to enter a new market.‟
Necessity for forecasting demand
Often forecasting demand is confused with forecasting sales. But, failing
to forecast demand ignores two important phenomena
Stock effects
The effects that inventory levels have on sales. In the extreme case of
stock-outs, demand coming into your store is not converted to sales due to a lack of availability. Demand is also untapped when sales for an item
are decreased due to a poor display location, or because the desired sizes are no longer available. For example, when a consumer electronics
retailer does not display a particular flat-screen TV, sales for that model are typically lower than the sales for models on display. And in fashion
retailing, once the stock level of a particular sweater falls to the point
where standard sizes are no longer available, sales of that item are
diminished.
Market response effects
The effect of market events that are within and beyond a retailer's
control. Demand for an item will likely rise if a competitor increases the price or if you promote the item in your weekly circular. The resulting
sales increase reflects a change in demand as a result of consumers responding to stimuli that potentially drive additional sales. Regardless
of the stimuli, these forces need to be factored into planning and
managed within the demand forecast.
Methods that rely on judgment
When using judgment, rely on structured procedures such as Delphi, simulated interaction, structured analogies, and conjoint
analysis. Simulated interaction is useful to predict the decisions in conflict situations, such as in negotiations. In addition to seeking
good feedback, forecasters should explicitly list all the things that might be wrong about their forecast. This will produce better
calibrated prediction intervals.
Unaided judgment : It is common practice to ask experts what will
happen. This is a good procedure to use when
• experts are unbiased • large changes are unlikely
• relationships are well understood by experts (e.g., demand
goes up when prices go down) • experts possess privileged information
• experts receive accurate and well-summarized feedback about their forecasts.
Prediction market : Prediction markets, also known as betting
markets, information markets, and futures markets have a long
history. Despite numerous attempts since the 1930s, no methods
have been found to be superior to markets when forecasting prices.
However, few people seem to believe this as they pay handsomely
for advice about what to invest in. Some commercial organizations
provide internet markets and software that to allow participants to
bet by trading contracts. However, there are no empirical studies
that compare forecasts from prediction markets with those from
traditional groups or from other methods.
Delphi technique: The Delphi technique was developed at RAND
Corporation in the 1950s to help capture the knowledge of diverse
experts while avoiding the disadvantages of traditional group
meetings. The latter include bullying and time-wasting. To forecast
with Delphi the administrator should recruit between five and
twenty suitable experts and poll them for their forecasts and
reasons. The administrator then provides the experts with
anonymous summary statistics on the forecasts, and experts‟
reasons for their forecasts. The process is repeated until there is
little change in forecasts between rounds – two or three rounds are
usually sufficient. The Delphi forecast is the median or mode of the
experts‟ final forecasts.
Game theory:Simulated interaction is a form of role playing for
predicting decisions by people who are interacting with others. It is
especially useful when the situation involves conflict. For example,
one might wish to forecast how best to secure an exclusive
distribution arrangement with a major supplier. To use simulated
interaction, an administrator prepares a description of the target
situation, describes the main protagonists‟ roles, and provides a
list of possible decisions. Role players adopt a role and read about
the situation. They then improvise realistic interactions with the
other role players until they reach a decision; for example to sign a
trial one-year exclusive distribution agreement. The role players‟
decisions are used to make the forecast.
Judgmental bootstrapping : Judgmental bootstrapping converts
subjective judgments into structured procedures. Experts are
asked what information they use to make predictions about a class
of situations. They are then asked to make predictions for diverse
cases, which can be real or hypothetical. The resulting data are
then converted to a model by estimating a regression equation
relating the judgmental forecasts to the information used by the .
Simulated interaction : Simulated interaction is a form of role
playing for predicting decisions by people who are interacting with
others. It is especially useful when the situation involves conflict.
For example, one might wish to forecast how best to secure an
exclusive distribution arrangement with a major supplier. To use
simulated interaction, an administrator prepares a description of
the target situation, describes the main protagonists‟ roles, and
provides a list of possible decisions. Role players adopt a role and
read about the situation. They then improvise realistic interactions
with the other role players until they reach a decision; for example
to sign a trial one-year exclusive distribution agreement. The role
players‟ decisions are used to make the forecast.
Intentions and expectations surveys : With intentions surveys,
people are asked how they intend to behave in specified situations.
In a similar manner, an expectations survey asks people how they
expect to behave. Expectations differ from intentions because
people realize that unintended things happen
Conjoint analysis : By surveying consumers about their
preferences for alternative product designs in a structured way, it
is possible to infer how different features will influence demand.
Methods that rely on quantitative data
With the proliferation of data, causal models play an increasingly important role in forecasting market size, market share, and sales.
Methods should be developed primarily on the basis of theory, not data. Finally, efforts should be made to ensure forecasts are free of
political considerations in a firm. To help with this, emphasis
should be on gaining agreement about the forecasting methods. Also, for important forecasts, decisions on their use should be
made before the forecasts are provided. Scenarios are helpful in guiding this process.
Extrapolation : Extrapolation methods use historical data on that
which one wishes to forecast. Exponential smoothing is the most
popular and cost effective of the statistical extrapolation methods.
It implements the principle that recent data should be weighted
more heavily and „smoothes‟ out cyclical fluctuations to forecast
the trend. To use exponential smoothing to extrapolate, the
administrator should first clean and deseasonalise the data, and
select reasonable smoothing factors. The administrator then
calculates an average and trend from the data and uses these to
derive a forecast .
Quantitative analogies : Experts can identify situations that are
analogous to a given situation. These can be used to extrapolate
the outcome of a target situation. For example, to assess the loss
in sales when the patent protection for a drug is removed, one
might examine the historical pattern of sales for analogous drugs.
To forecast using quantitative analogies, ask experts to identify
situations that are analogous to the target situation and for which
data are available
Rule-based forecasting : Rule-based forecasting (RBF) is a type of
expert system that allows one to integrate managers‟ knowledge
about the domain with time-series data in a structured and
inexpensive way. For example, in many cases a useful guideline is
that trends should be extrapolated only when they agree with
managers‟ prior expectations
Neural networks : Neural networks are computer intensive
methods that use decision processes analogous to those of the
human brain. Like the brain, they have the capability of learning
as patterns change and updating their parameter estimates.
However, much data is needed in order to estimate neural network
models and to reduce the risk of over-fitting the data (Adya and
Collopy 1998).
Data mining : Data mining uses sophisticated statistical analyses
to identify relationships. It is a popular approach. Data mining
ignores theory and prior knowledge in a search for patterns.
Despite ambitious claims and much research effort, we are not
aware of evidence that data mining techniques provide benefits for
forecasting.
Causal models : Causal models are based on prior knowledge and
theory. Time-series regression and cross-sectional regression are
commonly used for estimating model parameters or coefficients.
Causal models are most useful when (1) strong causal
relationships are expected, (2) the direction of the relationship is
known, (3) causal relationships are known or they can be
estimated, (4) large changes are expected to occur in the causal
variables over the forecast horizon, and (5) changes in the causal
variables can be accurately forecast or controlled, especially with
respect to their direction. Reviews of commercial software that can
be used to develop causal models are provided at the
forecastingprinciples.com site.
Segmentation :Segmentation involves breaking a problem down
into independent parts, using data for each part to make a
forecast, and then combining the parts. For example, a company
could forecast sales of wool carpet separately for each climatic
region, and then add the forecasts.
NEED FOR MARKETING FORECASTING
CONCLUSIONS FOR DEMAND FORECASTING
Significant gains have been made in forecasting for marketing, especially
since 1960. Advances have occurred in the development of methods based on judgment, such as Delphi, simulated interactions, intentions
studies, opinions surveys, bootstrapping, and combining. They have also occurred for methods based on statistical data, such as extrapolation,
rule-based forecasting, and econometric methods. Most recently, gains have come from the integration of statistical and judgmental forecasts.
General principles • Managers‟ domain knowledge should be incorporated into
forecasting methods. • When making forecasts in highly uncertain situations, be
conservative. For example, the trend should be dampened over the forecast horizon.
• Complex methods have not proven to be more accurate than
relatively simple methods. Given their added cost and the reduced understanding among users, highly complex procedures cannot be
justified. • When possible, forecasting methods should use data on actual
behaviour, rather than judgments or intentions, to predict behaviour.
• Methods that integrate judgmental and statistical data and procedures (e.g., rule-based forecasting) can improve forecast
accuracy in many situations.
• Overconfidence occurs with quantitative and judgmental methods. • When making forecasts in situations with high uncertainty, use
more than one method and combine the forecasts, generally using simple averages.
Methods based on statistical data
RESEARCH METHODS I- Why Are Research Methods Important?
Science, at a basic level attempts to answer questions (such as “why are we aggressive) through careful observation and collection of data. These
answers can then (at a more complex or higher level) are used to further
our knowledge of us and our world, as well as help us predict subsequent events and behavior. But, this requires a
systematic/universal way of collecting and understanding data – otherwise there is chaos.
At a practical level, methodology helps us understand and evaluate the
merit of all the information we‟re confronted with every day. For example, do you believe in the following studies?
Study indicated that the life span of left-handed people is significantly shorter than those who are right hand dominant.
Study demonstrated a link between smoking and poor grades.
There are many aspects of these studies that are necessary before one can evaluate the validity of the results. However, most people do not
bother to find out the details (which are the keys to understanding the studies) but only pay attention to the findings, even if the findings are
completely erroneous.
They are also practical in the workplace
Mental Health Profession – relies on research to develop new therapies, and learn which therapies are appropriate and effective
for different types of problems and people.
Business World – marketing strategies, hiring, employee
productivity, etc.
II- Different Types of Research Methods
Basic Research
Applied Research
Program Evaluation
III- How Do Non-Scientists Gather Information?
We all observe our world and make conclusions. How do we do this:
Seek an authority figure
Intuition
IV- THE SCIENTIFIC METHOD
B. Why of Conducting Scientific Research
Naturalistic Observation
Case Study
Survey
Psychological Testing
Experimental Research
Research Methodology
Type or research ---------------- Exploratory Research
Design.
Method of Research------------- Data collection Method
Through Customer enquiries Receive for submission of
Tender from domestic market.
Sampling method --------------- Through statistical and
Judgement method (Regression)
Sampling unit-------------------- BHEL Jhansi.
Sampling element transformer------Power transformer,
Dry Type, Instrument & HVR Transformers.
DATA COLLECTION
There are very few hard and fast rules to define the task of data
collection. Each research project uses a data collection technique appropriate to the particular research methodology. The two primary
goals for both quantitative and qualitative studies are to maximize
response and maximize accuracy.
When using an outside data collection service, researchers often validate the data collection process by contacting a percentage of the respondents
to verify that they were actually interviewed. Data editing and cleaning involves the process of checking for inadvertent errors in the data. This
usually entails using a computer to check for out-of-bounds data. Here which I collected the datas from enquiry records & annual reports of
BHEL are mainly secondary data set.
DATA ANALYSIS
Modern computer software has made the analysis of quantitative data a
very easy task. It is no longer incumbent on the researcher to know the formulas needed to calculate the desired statistics. However, this does
not obviate the need for the researcher to understand the theoretical and conceptual foundations of the statistical techniques. Each statistical
technique has its own assumptions and limitations. Considering the ease in which computers can calculate complex statistical problems, the
danger is that the researcher might be unaware of the assumptions and limitations in the use and interpretation of a statistic.
DATA IMPLEMENTATION
The most important consideration in preparing any research report is the nature of the audience. The purpose is to communicate information, and
therefore, the report should be prepared specifically for the readers of the report. Sometimes the format for the report will be defined for the
researcher (e.g. a dissertation), while other times, the researcher will
have complete latitude regarding the structure of the report. At a minimum, the report should contain an abstract, problem statement,
methods section, results section, discussions of the results, and a list of references.
MARKETING
There are many definitions of marketing. Consider some of the following alternative definitions:
“The all-embracing function that links the business with customer
needs and wants in order to get the right product to the place at the
right time”.
“The achievement of corporate goals through meeting and exceeding customer needs better than the competition”.
“The management process that identifies anticipates and supplies
customer requirements efficiently and profitably”.
“Marketing may be defined as a set of human activities directed at
facilitating and consummating exchanges”
Marketing
Why is the business’ attitude to marketing?
Marketing Orientation
Market
Analysis
Gain information on
The market:
Market Research
Persuade
customers to buy:
Marketing Mix
Market Analysis
Market
Segmentation
Marketing
Strategy
Quantitative
Analysis
Qualitative
Analysis
Consumer
Tests
Product
Price
Place
Promotion
Five Successful Marketing Techniques
1. Keep Adding Something New: Every time you add something new to your business you create an
opportunity to get more sales. For example, something as simple as adding new information on your web site creates another selling opportunity when
prospects and customers visit your site to see the new information.
Adding a new product or service to the list of those you already offer
usually produces a big increase in sales. The added product increases your sales in 3 different ways:
It attracts mew customers who were not interested in your current
products and services.
It generates repeat sales from existing customers who also want to
have your new product.
It enables you to get bigger sales by combing two or more items into special package offers.
2. Become a Valuable Resource:
Look for ways you can be a resource for your prospects and customers. Supply them with free information. Help them do things faster, easier, less
expensively. You get another opportunity to sell something every time they come back to you for help.
3. Separate Yourself from Your Competition: Find or create a reason for customers to do business with you instead of
with someone else offering the same or similar products. For example, do
you provide faster results, easier procedures, personal attention or a better guarantee?
Determine the unique advantage you offer to customers that your
competitors do not offer. Promote that advantage in all of your advertising. Give your prospects a reason to do business with you instead of with your
competition and you‟ll automatically get more sales.
4. Promote the End Result:
Your customers don‟t really want your product
or service. They want the benefit produced by using it.
For example, car buyers want convenient transportation with a certain image. Dental patients want healthy and good-looking teeth without
suffering any pain. Business opportunity seekers want personal and financial freedom for themselves and their family.
Make sure your web pages, sales letters and other sales messages are promoting the end result your customers want.
5. Anticipate Change: Change is the biggest challenge to your business
success. The days are gone when a business could constantly grow by simply repeating what It did successfully in the past… or even recently.
Aggressive, innovative competitors and rapidly changing technology make it
impossible.
Expect change and prepare for it. Don‟t wait until your income declines to take action. Develop the habit of looking for early signs that something is
changing. Then confront it before you start to lose business.
Tip:Insulate yourself against the impact of change by increasing the number of products and services you offer and by using a variety of different
marketing methods. Only a small portion of your total business will be affected if the sales of one product decline or the response to one marketing
method drops.
Marketing planning – Mission
Mission
“A mission describes the organization‟s basic function in society, in
terms of the products and services it produces for its customers”.
A clear business mission should have each of the following elements:
Marketing Planning – Values & Vision
Purpose Why the business
exists
Strategy&
Scope What business
and how
Values What management
Believes in
Standards &
Behaviors The rules that guide
how the business
operates
Values from the foundation of a business management style.
Values provide the justification of behavior and, therefore, exert significant
influence on marketing decisions.
Market analysis – defining the market
All business operates in “markets”. But what is a market?
And how can it be defined?
Traditionally, a “market” was a physical place where buyers and sellers
gathered to buy and sell goods. Economists describe a market as a collection of buyers and sellers who transact over a particular product or product
class (such as the housing market or the grain market).
It is important to be careful about how a market is defined. The following key marketing process relies on a relevant definition:
Measuring market share
Measuring market size and growth
Specifying target customers Identifying relevant competitors
Formulating a marketing strategy
A market can be defined as follows:
A market is the set of all actual and potential buyers of a product or
service.
Five basic markets & their connecting flows:
Resource
Market
Government
Market
Intermediary
Market
Manufacturer
Market
Consumer
Market
Types of market
Markets can be analysis via the product itself, or end-consumer, or both. The most common distinction is between consumer and industrial
markets.
Consumer Markets Consumer markets are the markets for products and services bought by
individuals for their own or family use. Goods bought in consumer markets
can be categorized in several ways:
Fast-moving consumer goods (“FMCGs”)
Consumer durables
Soft goods
Industrial Markets
Industrial markets involve the sale of goods between business. These are goods that are not aimed directly at consumers.
Industrial markets include
Selling finished goods
Examples-office furniture, computer systems
Selling raw materials or components Example-steel, coal, gas timber
Selling services to businesses
Example-waste disposal, security, accounting &legal services
MARKET RESEARCH
Market research answers questions in respect of different markets. The
purpose of this research is to gather facts about markets and the forces operating therein, like competitors and government, so as to enhance the
competitive strength of the company in the market place. The areas of market research broadly include:
Determine the size of both current and potential market.
Assessing the market trends.
Ascertaining the strengths and weaknesses of competitors‟ marketing
strategies.
Determining the impact of current and contemplated legislative
actions of the state on the marketing effort of the company.
Demand and sales forecasting.
Market Segmentation
“Market Segmentation is the division of a market into those
subgroups which have special needs & preferences & which represent sufficient pockets of demand to justify separate marketing
strategies”.
The concept of market segmentation is based on the fact that markets are heterogeneous.
Bases for Segmentation
The major segmentation variables are:
1. Geographic segmentation
2. Demographic segmentation 3. Psychographic segmentation
4. Behavior segmentation
1. Geographic segmentation:
Geographic segmentation calls for division of the market into different geographic units such as nation, states, regions,
countries, cities, neighbourhood, density of city, climate, etc.
2. Demographic segmentation:
In demographic segmentation, we divide the
market into groups on the basis of variables such as age, family size, gender, income, occupation, education religion, generation, nationality,
etc. One reason, demographic variables are so popular with marketers is that
they‟re often associated with consumer needs & wants. Another is that they‟re easy to measure.
3. Psychographic segmentation:
Psychographics is the science of using psychology & demographics to better understand consumers. In
Psychographic segmentation, buyers are divided into different groups on the basis of psychological/personality traits. Such as lifestyle, values,
social class, etc.
4. Behavior segmentation:
In Behavior segmentation, marketers divide buyers into groups on the basis of -use occasion, benefit sought, usage
rate, loyalty status, readiness to purchase, attitude toward product, user status, etc.
Why Segment Market?
There are several important reasons why business should attempt to segment their market carefully. These are summarized below:
1. Enhanced profits for business. 2. Better opportunities for growth.
3. Retain more customers. 4. Target marketing communications.
5. Gain share of the market segment.
Products – Introduction
A product is defined as:
“Anything that is capable of satisfying customer needs”
A product group (or product line) is a group of brands that are closely related in terms of their functions and the benefits they provide (e.g. Dell‟s
range of personal computers or Sony‟s range of televisions).
There are two main types of product brand:
(1) Manufacture brands
(2) Own-label brands
Manufacturer brands are created by producers and use their chosen brand
name. The producer has the responsibility for marketing the brand, by building distribution and gaining customer brand loyalty. Good examples
include Microsoft, Panasonic and Mercedes.
Own-label brands are created and owned by distributions.
Good examples include Tesco and Sainsbury‟s
Business need to regularly look for new products and markets for future growth. A useful way of looking at growth opportunities is the An off Growth
matrix which suggests that there are four main ways in which growth can be achieved through a product strategy:
(1) Market penetration- Increase sales of an existing product in an
existing market. (2) Product development – Improve present products and/or develop new
products for the current market.
(3) Market development – Sell existing products into new markets (e.g.
developing export sales). (4) Diversification– Develop new products for new markets.
Products – Product life cycle
We define a product as “anything that is capable of satisfying customer needs. This definition includes both physical products (e.g. cars, washing
machines, DVD players) as well as services (e.g. insurance, banking, private health care).
Business should manage their products carefully over time to ensure that they deliver products that continue to meet customer wants. The process of
managing groups of brands and product lines is called portfolio planning.
The stages through which individual products develop over time is called commonly known as the “Product Life Cycle”.
The classic product life cycle has four stages (illustrated in the diagram below): introduction; growth; maturity and decline
Introduction Stage A period of slow sales growth as the product is introduced in the market.
Profits are non-existent because of the heavy expenses of product introduction.
Growth Stage
The Growth Stage is characterized by rapid growth in sales and profits.
Maturity Stage
The Maturity Stage is, perhaps, the most common stage for all markets, it is in this stage that competition is most intense as companies fight to maintain
their market share.
Decline Stage
In the Decline Stage, the market is shrinking, reducing the overall amount of profit that can be shared amongst the remaining competitors.
Object of Product Analysis
A Product Analysis refers to the study of:
a) The raw materials used b) Components,
c) Features like shape, size, colour, weight, design, etc. d) The merits of the product- its convenience, portability, style, comfort,
durability, wholesomeness or purity. e) Packing.
f) Branding
Product Analysis
Those who are in the business of marketing, industrial products should be
continuously on the lookout of modifications in the existing products with a view to:
(a) improving the quality & functional performance of the products and (b) ensuring that the products fulfills the changing requirements of the
customers. The industrial marketers may also have to concern himself with the end
product and the profitability of his customer and if possible suggest to him
how these could be improved.
For this purpose, the Industrial Marketer will have to continuously subject his own products to marketing research – to product analysis and to new
product ideas in particular. Product Analysis of his existing products would include the study of the following aspects of his products:
i. Field performance of the products, and the quality, purity, fineness,
etc. of the materials and parts used in their manufacture.
ii. Design of the product and features like size, shape, weight, applicability, interchangeability, etc.
iii. Benefits like convenience of operating or using, durability, portability, etc.
iv. Other special features or benefits if any.
Since industrial customers are usually fewer, large, and geographically
concentrated, the problems relating to large populations and large territories in the selection of a sample would get reduced. In some cases the number of
customers might be so few and well listed in the company record according to area, type of business, sales turnover, etc.; that sample selection will be
much easier.
Customers or Consumers?
A common question that arises when studying marketing is the following:
What is the difference between a customer and a consumer?
The following distinction should help:
A Customer – purchases and pays for a product or service.
A Consumer – is the ultimate user of the product or service, the
consumer may not have paid for the product or service.
Consider the following example:
A Food manufacturing business makes own-label, Italian ready
meals for the major supermarkets.
So far as the business is concerned, the customer is the supermarket to
whom it supplies meals.
The consumer is the individual who eats the meal.
In terms of its marketing effort, who should the business above target?
In reality – it needs to understand the needs and wants of both the customer and the consumer.
It needs to develop a strong understanding of the needs of the supermarkets in terms of their requirements for ready meals (e.g. packaging, recipes, price
and delivery).
It also needs to understand (perhaps with the help of the supermarkets) the needs and wants of the consumer. How are tastes changing? Are consumers
happy with the standard/taste of the product?
Competitors analysis – kinds of
Information
The tables below lists the kinds of competitors‟ information that would help
business complete some good quality competitor analysis.
What business probably already know their competitors Overall sales and profits
Sales and Profits by market Sales by main brand
Cost structure Market shares (revenues and volumes)
Organization Structure
Distribution system Identity/profile of senior management.
The diagram below shows the impact of varying levels of competitor action
on the profits of a business:
Role of competitor analysis
Competitor analysis has several important roles in marketing:
To help management understand their competitive advantages/disadvantages relative to competitors.
To generate understanding of competitor‟s past, present (and most
importantly) future strategies.
To provide an informed basis to develop strategies to achieve
competitive advantage in the future.
To help forecast the returns that may be made from future
investments (e.g. how will competitors respond to a new product or pricing strategy)?
What questions should be asked when undertaking competitor analysis?
The following is a useful list to bear in mind:
Who are our competitors? (See the section on identifying competitors further below)
Weak competitors response
Moderate competitors response
Strong competitor response
Annual
profits
What threats do they post?
What is the profile of our competitors?
What are the objectives of our competitors?
What strategies are our competitors pursuing and how successful are these
strategies?
What are the strength and weaknesses of our competitors?
How are our competitors likely to respond to any changes to the way we do
business?
Pricing – Introduction
Setting the right price is an important part of effective marketing. It is the
only part of the marketing mix that generates revenue (product, promotion and place are all about marketing costs).
Price is also the marketing variable that can be changed most quickly,
perhaps in response to a competitor price change.
Put simply, price is the amount of money or goods for which a thing is
bought or sold.
The price of a product may be seen as a financial expression of the value of that product.
For a consumer, price is the monetary expression of the value to be enjoyed/
benefits of purchasing a product, as compared with other available items.
The concept of value can therefore be expressed as:
(Perceived) VALUE = (perceived) BENEFITS - (perceived)
COSTS A Customer‟s motivation to purchase a product comes firstly from a need
and a want: e.g.
Need: “I need to eat.
Want: I would like to go out for a meal tonight”
The second motivation comes from a perception of the value of a product in satisfying that need/want (e.g. “I really fancy a McDonalds”).
The perception of the value of a product varies from customers to customer,
because perceptions of benefits and costs vary.
Perceived benefits are often largely dependent on personal taste (e.g. spicy
versus sweet or green verses blue). In order to obtain the maximum possible value from the available market, business try to „segment‟ the market – that
is to divide up the market into groups of consumers whose preferences are broadly similar – and to adapt their products to attract these customers.
In general a products perceived value may be increased in one of two ways – either by:
(1) Increasing the benefits that the product will deliver, or,
(2) Reducing the cost.
For consumers, the PRICE of a product is the most obvious indicator of cost – hence the need to get product pricing right.
Factors Affecting Demand:
Consider the factors affecting the demand for a product that are:
(1) Within the control of a business and (2) Outside the control of a business.
Factors within a business control include:
Price (assuming an imperfect market – i.e. not perfect competition).
Product research and development.
Advertising & Sales promotion.
Training and organization of the sales force
Effectiveness of distribution (e.g. access to retail outlets; trained
distributor agents)
Quality of after-sales services (e.g. which affects demand from repeat-business)
Factors outside the control of business include:
The price of substitute goods and services.
The price of complementary goods and services.
Consumer‟s disposable income.
Consumer tastes and fashions.
Price is therefore, a critically important element of the choices available to businesses in trying to attract demand for their products.
BRANDS
Meaning of brands
Brands are a mean of differentiating a company‟s products and services
from those of its competitors.
There is plenty of evidence to prove that customers will pay a substantial price premium for a good brand and remain loyal to that brand. It is
important, therefore, to understand what brands are and why they are important.
“…. It is not factories that make profits, but relationships with
customers and it is company and brand names which secure those
relationships”.
Businesses that invest in and sustain leading brands prosper whereas those that fail are left to fight for the lower profits available in commodity markets.
What is brand?
One definition of a brand is as follows:
“A name, term, sign, symbol or design, or a combination of these, that
is intended to identified the goods and services of one business or
group of businesses and to differentiated them from those of competitors”. Interbrand – a leading branding consultancy – defines a brand in this way:
“A mixture of tangible and intangible attributes symbolized in a
trademark, which if properly managed, creates influence and generates value”.
Three other important terms relating to brands should be defined at this stage:
Brand equity
Brand image
Brand extension
Brands and products
Analysis of Demand for transformers in Domestic
market of BHEL Jhansi Unit
The demand forecasting for the organizations like Bharat Heavy Electricals
Ltd.(BHEL), Jhansi is of great importance because it involves a big amount of working capital. If we have some predictions about the future demand of
transformers we can make better plan for production to ensure the delivery of right product at right time and at the right place. The demand forecasting
also helps to make allotment of proper working capital.
The method used for demand forecasting is REGRESSION
ANALYSIS. This method is very useful for making demand forecast for the product/products which have actually increasing trend of demand but
forecast goes downward or, conversely the trend for demand is downward and the forecast goes upward. To minimize this effect a factor is added. This
procedure adjusts the forecast according to the trend. It has been observed that the values of forecast come pretty close to the actual values.
REGRESSION METHOD
Meaning & Definition
The measurement of the mutual relations of two or more variables is got by
regression. Commonly, the question arises if there is some relation between the weight and height of an infant, can its weight be calculated or if we
know its age can by this other magnitudes of it be declared .Can the quantity of demand and supply be known for a definite value. What will be
the effect on the consumption quantity, if the tax on intoxicant is doubled. For this & for many other measurements of relations the method of
regression is used.
According to Blair, “Regression is the measure of the average relationship between two or more variables in the terms of the original
units of data”.
“In more popular sense we may call regression a trend, a line which
shows how many units of change in one variable are associated with one unit of change in another Variable.”
According to Yule & Kendall, “The term regression is not a particular
happy one from the etymological point of view, but it is so firmly embedded in statistical literature that we make no attempt to replace.
In general, the idea ordinarily attached to the word „regression, does
not touch upon the connotation, & it should be regarded merely a convenient term”.
UTILITY OF REGRESSION
1. To forecast the probable value : In the analytical studies of different kinds, there is great value of regression. By it we can know that if out
of the two connected series the value of one has been given what may possibly be the value of the other series connected with it. If the rate
of pay scale is increased what will be its effect on the efficiency; there
having been an increase in the common price level how much will there be a change in the life leading expenditure, increase or decrease
in the study will how much effect the result of student etc. are many questions that can be satisfactorily answered by regression method.
2. To Know the Correlation & Co-Variation: With the help of
regression the correlation between the two series can be known. If the two lines of regression cover each other the correlation between the
two series is complete but if they cross each other at 90˚ angle, the
correlation is cipher. The more are the lines of regression inclined towards each, the quantity of correlation is the greater.
When the two lines rise from the lower left to right upper the correlation is positive but opposite to it when the lines move from
upper to the lower side the correlation is negative. Co-Variation too can be known by it.
TOTAL DEMAND OF PRODUCT (TRANSFORMERS)
IN DOMESTIC MARKET (FROM YEAR 2005-2012)
YEAR POWER TRANSFORMER
DRY-TYPE TRANSFORMER
INSTRUMENT TRANSFORMER
HVR TRANSFORMER
2005-06 842 335 6822 1149
2006-07 948 873 7419 3684
2007-08 760 1200 5875 4611
2008-09 1192 927 10715 2803
2009-10 1150 794 8845 3043
2010-11 975 708 9702 4289
2011-12 855 769 7178 2451
FORMULAS USED IN REGRESSION:
x= Mean for the number of years used.
y= Mean for the demand collected in quantity.
X= Number of years used.
Y= Number of demands collected.
{Y= a+b*x} where a, b are constants & Y shows the trend for
demand.
b= sum(X-x)(Y-y)/sum(X-x)^2
a=y-b*x
TOTAL DEMAND OF BHEL PRODUCTS
IN DOMESTIC MARKET
POWER TRANSFORMER
YEAR X Y X-x (X-x)^2 Y-y (X-x)(Y-y) Y=a+bx
2005-06 1 842 -3 9 -118 354 908
2006-07 2 948 -2 4 -12 24 925
2007-08 3 760 -1 1 -200 200 942
2008-09 4 1192 0 0 232 0 959
2009-10 5 1150 1 1 190 190 976
2010-11 6 975 2 4 15 30 993
2011-12 7 855 3 9 -105 -315 1010
4 960
28
483
b= 17.25 17
a= 891 891
DEMAND FORECAST
YEAR X Y
2012-13 8 1027 2013-14 9 1044 2014-15 10 1061 2015-16 11 1078 2016-17 12 1095
0
200
400
600
800
1000
1200
1400
2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12
DEMAND
DEMAND
980
1000
1020
1040
1060
1080
1100
1120
2012-13 2013-14 2014-15 2015-16 2016-17
DEMAND FORECASTED
DEMAND FORECASTED
0
200
400
600
800
1000
1200
1400
2005-062006-072007-082008-092009-102010-112011-12
DEMAND
TREND
980
1000
1020
1040
1060
1080
1100
1120
2012-13 2013-14 2014-15 2015-16 2016-17
DEMAND FORECAST
DEMAND FORECAST
DRY TYPE TRANSFORMER
YEAR X Y X-x (X-x)^2 Y-y (X-x)(Y-y) Y=a+bx
2005-06 1 335 -3 9 -466 1398 899
2006-07 2 873 -2 4 72 -144 919
2007-08 3 1200 -1 1 399 -399 939
2008-09 4 927 0 0 126 0 959
2009-10 5 794 1 1 -7 -7 979
2010-11 6 708 2 4 -93 -186 999
2011-12 7 769 3 9 -32 -96 1019
4 801
28
566
b= 20.21429 20
a= 879.1429 879
DEMAND FORECAST
YEAR X Y
2012-13 8 1039 2013-14 9 1059 2014-15 10 1079 2015-16 11 1099 2016-17 12 1119
0
200
400
600
800
1000
1200
1400
2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12
DEMAND
DEMAND
980
1000
1020
1040
1060
1080
1100
1120
1140
2012-13 2013-14 2014-15 2015-16 2016-17
DEMAND FORECASTED
DEMAND FORECASTED
0
200
400
600
800
1000
1200
1400
2005-062006-072007-082008-092009-102010-112011-12
TREND
DEMAND
980
1000
1020
1040
1060
1080
1100
1120
1140
2012-13 2013-14 2014-15 2015-16 2016-17
DEMAND FORECAST
DEMAND FORECAST
INSTRUMENT TRANSFORMER
YEAR X Y X-x (X-x) 2̂ Y-y (X-x)(Y-y) Y=a+bx
2005-06 1 6822 -3 9 -1257 3771 7157
2006-07 2 7419 -2 4 -660 1320 7464
2007-08 3 5875 -1 1 -2204 2204 7771
2008-09 4 10715 0 0 2636 0 8078
2009-10 5 8845 1 1 766 766 8385
2010-11 6 9702 2 4 1623 3246 8692
2011-12 7 7178 3 9 -901 -2703 8999
4 8079
28
8604
b= 307.2857 307
a= 6849.857 6850
DEMAND FORECAST
YEAR X Y
2012-13 8 9306 2013-14 9 9613 2014-15 10 9920 2015-16 11 10227 2016-17 12 10534
0
2000
4000
6000
8000
10000
12000
2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12
DEMAND
DEMAND
8600
8800
9000
9200
9400
9600
9800
10000
10200
10400
10600
10800
2012-13 2013-14 2014-15 2015-16 2016-17
DEMAND FORECASTED
DEMAND FORECASTED
0
2000
4000
6000
8000
10000
12000
TREND
DEMAND
8600
8800
9000
9200
9400
9600
9800
10000
10200
10400
10600
10800
2012-13 2013-14 2014-15 2015-16 2016-17
DEMAND FORECAST
DEMAND FORECAST
HVR TRANSFORMER
YEAR X Y X-x (X-x) 2̂ Y-y (X-x)(Y-y) Y=a+bx
2005-06 1 1149 -3 9 -1998 5994 2767
2006-07 2 3684 -2 4 537 -1074 2894
2007-08 3 4611 -1 1 1464 -1464 3021
2008-09 4 2803 0 0 -344 0 3148
2009-10 5 3043 1 1 -104 -104 3275
2010-11 6 4289 2 4 1142 2284 3402
2011-12 7 2451 3 9 -696 -2088 3529
4 3147
28
3548
b= 126.7143 127
a= 2640.143 2640
DEMAND FORECAST
YEAR X Y
2012-13 8 3656 2013-14 9 3783 2014-15 10 3910 2015-16 11 4037 2016-17 12 4164
0
500
1000
1500
2000
2500
3000
3500
4000
4500
5000
2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12
DEMAND
DEMAND
3400
3500
3600
3700
3800
3900
4000
4100
4200
4300
2012-13 2013-14 2014-15 2015-16 2016-17
DEMAND FORECASTED
DEMAND FORECASTED
0
500
1000
1500
2000
2500
3000
3500
4000
4500
5000
2005-062006-072007-082008-092009-102010-112011-12
TREND
DEMAND
3400
3500
3600
3700
3800
3900
4000
4100
4200
4300
2012-13 2013-14 2014-15 2015-16 2016-17
DEMAND FORECAST
DEMAND FORECAST
Analysis of Demand in Domestic Market
1. Power Transformer:- It is clear from data and graph that the demand of power transformer is
fluctuating in nature. In 2005 to 2012, demand was 842, 948, 760, 1192, 1150, 975 & 855 in quantity. The reasons for fluctuating & decrease in
trend from 2008-12 may be due to role of recession, FDI, China equipment‟s
are imported & tenders go to Foreign market so no role for Indian parties to involve for demand.
After Forecasting, from 2012-2017, the demand is continuously increasing in a very small amount (1027, 1044, 1061, 1078 &
1095) in quantity.
2. Dry Type Transformer:- In this type of transformer, In 2005 to 2012, the actual demand was 335,
873, 1200, 927, 794, 708 & 769 in quantity. The reasons for fluctuating
nature in trend from 2005-12 may be due to role of recession, FDI, China equipment‟s are imported, costlier design so less demand & no coils filled so
less dangerous used mainly in Small scale industries, Townships etc., so more demand for Dry Type Transformers.
After forecasting, from 2012-2017, the demand is continuously increasing in a very small amount (1039, 1059, 1079, 1099 &
1119) in quantity.
3. HVR Transformer:-
In this type of transformer, In 2005 to 2012, the actual demand was 1149, 3684, 4611, 2803, 3043, 4289 & 2451 in quantity. The reasons for
fluctuations may be due to role of recession, FDI, China equipment‟s are imported & technology has changed drastically.
After forecasting, In 2012-17 the demand is increasing
continuously increasing in good amount (3656, 3783, 3910, 4037 & 4164) in quantity.
4. Instrument Transformer:-
In this type of transformer, In 2005 to 2012, the actual demand was 6822, 7419, 5875, 10715, 8845, 9702 & 7178 in
quantity. The reasons for fluctuations may be due to role of recession, FDI, China equipment‟s are imported, decrease in trend due to Indian market
tenders doesn‟t float and it goes to Foreign market & less technological.
Increase trend shows indications of power shortage increase, population increase, more standard of living so more power instruments are required &
some new customers are coming up due to liberalization of Govt. policies for captive power plant.
After forecasting, from 2012 to 2017, the demand is continuously increasing in a very large amount (9306, 9613, 9920, 10227 & 10534) in
quantity.
SWOT ANALYSIS OF BHEL
STRENGTH:-
1. Manufacturing Capacity:- The manufacturing capacity of BHEL is
105 transformer per year . However the demand in market is 900 per
year. 2. Mixed Product:- BHEL manufacture mixed product such as power
transformers, DTT , INST transformer, HVR, etc. That‟s why it can meet mixed demand also compared to other manufacturers
3. EPC contractor (Engineering Procurement & Construction):- It has 14 manufacturing units. BHEL can design, procure raw material
& do construct transformers.
WEAKNESS:-
1. Long Procurement Cycle:- Being a Government organization
everything is goes in a systematic manner & it takes more & more time.
2. Delay in Response:- Because of long procurement cycle the response is also delay.
OPPORTUNITY:-
1. High Demand:- Because of high demand it can takes more orders & do more business.
2. It is established supplies so some government parties also prefer BHEL 3. Being an EPC Contractor it can get more EPC contract.
4. Joint Venture with Siemens in the name of Power Plant Performance
Improvement Limited (PPIL), is a major strength for the company. This tie-up will be beneficial as there is a lot of scope for business.
THREAT:-
1. Competition with Siemen‟s, Vijay, BL, EMG, etc.
2. New entrance of Firms in Market Such as Kanohar, Victory, IMP, ECE, etc.
FINDINGS
A Demand of BHEL Transformers has been increased in the last two
years.
Less technological in comparison to their competitors.
At this time BHEL has good number of customers, this shows the
progress of BHEL in the near future.
LIMITATIONS
Nobody is perfect in the world. Everybody makes some mistakes. If
somebody doesn‟t makes mistakes that means he or she doesn‟t work because when you do some work you are bound to make some mistakes &
there is always room for improvements. So this study may also not be free of
mistakes. But I have tried my level best to make this project BEST. There may be some mistakes in this study. They may be as follows:-
The DATA has been mainly collected from Transformer & Commercial Department (TRC) of BHEL Jhansi, mainly it comes under the
SECONDARY DATA (from BHEL annual reports, records & books)
CONCLUSION
After studying and analyzing various aspects of this project, I have
concluded that I have gained lot of knowledge about this unit and BHEL
Company. My project which is based on the topic of “Demand Analysis of Transformers” is based the export-import procedure and demand analysis
of BHEL.
During my training period I have done rotation work in which I know about
its working routine and collected lots of information about its product like transformers and Locomotive. I have done my project on “Demand Analysis
of transformers” such as power transformer, dry type transformers, HVR
transformers & Instrument transformer.
So, through this project I have learned:
Analysis of Future demand of BHEL transformers in domestic market
Export & Import Procedure
Specific requirement of export & import
RECOMMENDATION & SUGGESTIONS
BHEL must try to find out the reasons of decreasing demand of
transformers such as power transformers, Instrument transformers & HVR transformers in domestic market.
BHEL must try to change their marketing strategies.
There should be optimum utilization of all factors of production.
Modernization of techniques and up gradation of existing machinery.
Avoid indigenization.
They should try to motivate the employee and try to change their work so they get the interest against their work and enjoy the work also
increase the knowledge.
The main products of BHEL JHANSI are Transformers &
Locomotives.To expand the market for these products of BHEL, regular seminars should be conducted. These seminars should
emphases on the awareness & advertisement of BHEL‟s product &
their characteristic, features etc. among the customers related to that region this will in turn help in advertising of BHEL‟s product in the
region of immense competitors where the other players are situated.
WEBSITES VISITED
www.Bhel.com
www.google.com
www.Ask.com
www.wikipedia.in
BIBLOGRAPHY
Marketing Management (Kotler)
Marketing Research (C.R. Kothari)
Business Statistics (R.P. Varshney)
Annual REPORTS of BHEL
