ATAR Forecast Example for a Small Business In this ATAR forecast example, we will consider a small business. In this example, there is a coffee shop in a local area. Their new product is a service – they plan to renovate their store and add a small bookshop area. This area will co-exist within their … Read more…
Understanding the financial metrics As you will see when you use the free Excel template for your ATAR forecasts, there are several financial metrics automatically produced at the bottom of the spreadsheet. As you can see, these financial metrics include: net present value (NPV) pay-back period (in years) internal rate of return (IRR) marketing ROI … Read more…
What is the ATAR forecasting model? The ATAR forecasting model is primarily designed to forecast sales and profit contribution of new products following its initial years of release/launch. In most cases, in addition to achieving their strategic goals, firms will introduce new products to the marketplace in order to increase their market share, sales revenue, … Read more…
Prices, costs, and average purchase volume The core component of the ATAR model is designed to generate the estimation of the proportion of the target market to become ongoing loyal or occasional customers = the brand’s customer base. Once we obtain this information, we need to combine it with price, cost and purchase levels in … Read more…
Nothing destroys the credibility of a business report faster than inaccurate or wildly optimistic financial forecasts. I have seen students provide financial forecasts of a product line extension that would generate billions in dollars within a couple of years. And while that may have happened with Facebook, but it is unlikely that the average new … Read more…
Interrelated ATAR factors in the forecast Possibly one of the more troublesome issues to consider when using the ATAR model for forecasting new products is how the four basic components – awareness, trial, availability and repeat/rebuy – impact each other. These ATAR factors are not independent It would be a mistake to consider that these … Read more…
Product cannibalization in the ATAR forecast Product cannibalization is when the firm’s new product “wins” a proportion of its sales (market share) from the firm’s other existing products – that is, the new product “eats away” the market share of the firm’s other products. We must take product cannibalization into account in the ATAR forecast … Read more…
What drives trial levels? There are numerous factors that will impact the percentage of consumers that trial a product, which marketers can influence and drive. Some of the factors to take into account include: Is this a product line extension? Product line extensions would generally have higher trial rates. Does this new product belong to … Read more…
Because of the nature of the structure of the ATAR forecasting model, the marketing department will become accountable for delivering the various ATAR components if the new product is approved for development and launch. This means, therefore, if you have indicated that the new product will generate a 25% level of awareness in the first … Read more…
Do I need to use the financial metrics? As you will see when you use the free Excel template for your ATAR forecasts, there are several financial metrics automatically produced at the bottom of the spreadsheet. As you can see, these financial metrics include: net present value (NPV) pay-back period (in years) internal rate of … Read more…
