Page 167 - Foundations of Marketing

134 Part 2 | Marketing Research and Target Markets

E ntrepreneurship in Marketing

How Skullcandy Segments Its Market

Rick Alden, an avid snowboarder, founded Skullcandy in Skullcandy’s headphones and earbuds are specially
2003 with the idea of making trendy, functional head- made for snowboarders and others who listen to music
phones for music lovers who enjoy active sports and while engaging in snow or sun sports. Instead of the
want to look stylish. The iPod era was in full swing, and usual black or white earbuds, Skullcandy’s earbuds are
consumers could now take their digital music collec- brightly colored to appeal to sports-minded consumers
tions anywhere and everywhere—even on snow-capped with fashion flair.
mountains. “I wanted to integrate headphones into With more than $ 200 million in annual revenue and
backpacks, beanies, helmets—to make an easier music distribution in 70 countries, Skullcandy now competes
delivery device,” he remembers. against global giants such as Sony. To continue grow-
Although age was a consideration—many of the ing, the company has adjusted its segmentation to reach
consumers in his target market were in their teens or consumers involved in a wider variety of active-sports
twenties—lifestyle and attitude turned out to be more lifestyles, including skateboarders, surfers, inline skaters,
important variables for segmenting the overall market. and motocrossers.
d

© iStockphoto.com/CRTd

Executive Judgment
Executive judgment is the intuition of one or more executives. This is an unscientific but
expedient and inexpensive approach to sales forecasting. It is not a very accurate method, but
executive judgment may work reasonably well when product demand is relatively stable and
the forecaster has years of market-related experience. However, because intuition is heavily
influenced by recent experience, the forecast may weight recent sales booms or slumps exces-
sively. Another drawback to intuition is that the forecaster has only past experience as a guide
for deciding where to go in the future.

Surveys
executive judgment A sales
forecasting method based on Another way to forecast sales is to question customers, sales personnel, or experts regarding
the intuition of one or more their expectations about future purchases. In a customer forecasting survey , marketers ask
executives customers what types and quantities of products they intend to buy during a specific period.
customer forecasting survey This approach may be useful to a business with relatively few customers. Consider Lockheed
A survey of customers regarding Martin, the U.S. government’s largest contractor. Because most of its contracts come from
the types and quantities of the same customer, the government, Lockheed Martin could conduct customer forecasting
products they intend to buy surveys effectively. PepsiCo, by contrast, has millions of customers and could not feasibly use
during a specific period
a customer survey to forecast future sales.
sales force forecasting In a sales force forecasting survey , the fi rm’s salespeople estimate anticipated sales in
survey A survey of a their territories for a specifi ed period. The forecaster combines these territorial estimates to
firm’s sales force regarding arrive at a tentative forecast. A marketer may survey sales staff for several reasons, the most
anticipated sales in their
territories for a specified period important being that the sales staff is the company personnel closest to customers on a daily
basis. They therefore have fi rst-hand knowledge about customers’ product needs. Moreover,
expert forecasting survey when sales representatives assist in developing the forecast, they are invested in the process
Sales forecasts prepared by
experts outside the firm, such and are more likely to work toward its achievement.
as economists, management When a company wants an expert forecasting survey , it hires professionals to help pre-
consultants, advertising pare the sales forecast. These experts are usually economists, management consultants, adver-
executives, or college tising executives, college professors, or other individuals outside the fi rm with experience in a
professors specifi c market. Drawing on this experience and their analyses of available information about

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