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To make sales forecasts we use a model called STM (Simulated Test Market) developed by Lynn Lin (father of the BASES® model). This tool requires information on the marketing plan of the product being tested in order to calibrate and predict future sales. The necessary marketing information is:
- Investment in media and brand awareness: How much and with what frequency.
- Promotion activities: What type, when, % of participating distribution channels, for how long and estimated number of consumer exposed to the promotions.
- Distribution: How fast will distribution reach the point of sale in order to calculate sales per channel.
In a nutshell, the STM is based on showing the product or service concept to consumers and guaging their reactions, especially in terms of purchase intent and price. The model is integrated into the marketing plan to forecast sales.
The key measures are:
- Purchase intent
- Likes/dislikes
- Amount of purchase
- Buying frequency
- Price/value ratio
- Intensity of liking
- Effect on purchasing behavior
- Reaction toward different prices
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