2. Demand
Forecasting…
It is the activity of estimating
the quantity of a product or
service that consumers will
purchase.
3. All forecast are built on…
What people Say:
Involves surveying the opinions of buyers
or those closed to them.
What people do:
Putting the product Into a test market to
measure buyers response.
What people Have done:
Involves analyzing records of past buying
behavior or using time series analysis or statiscal
demand analysis.
5. Survey Of Buyers’ Intention
This forecasting is the
art of anticipating
what buyers are likely
to do under a given
set of condition. Because buyers behavior is so
important, buyers should be Surveyed.
For major consumer durables, several research
organizations conduct periodic surveys of
consumer buying intentions.
6. Composite of sales force
opinions
In this method the sales forecasting
is done bye the sales force.
Each salesman develops the
forecast for his respective territory.
The territory wise forecast are
consolidated at each branch area
level and the aggregate of all these
forecasts is taken as the corporate
forecast.
7. When buyer interviewing is impractical, the
company may ask its sales representative to
estimate future sales, each sales representative
estimate how much each current and prospective
customer will buy of each of company's product.
Few companies use sales force’s estimates
without making some adjustments, as they may
be pessimistic or optimistic.
Or they might go from one extreme to another
because of a recent setback or success.
8. Advantages
1)The salesman are closest to
the customers and ate able to
judge their minds and thus
the market more correctly.
2) Have greater stability and
reliability because of the largeness of the
sample.
3)The forecast derived by this method could be
easily and meaningfully broken down-territory-
wise,product-wise,customer-type-wise and month-
wise etc
9. Disadvantages
Salesmen are certainly not experts in forecasting,
they cannot use sophisticated techniques.
Since their sales quotas are to be based on their
sales forecasts, they may tend to underestimate
demand and play it safe
They may not known the changes taking place in
the economy and the given industry which may
be necessary to predict the future.
10. Expert Opinion:
In this type of survey method
company takes suggestions form
the experts in concerned field of
inside or outside of the
organization .
The opinions of outside expertise
mat include opinions given by:
1. News papers
2. Trade journals
3. Opinions of wholesalers &
distributers, suppliers
4. Trade associations
5. Marketing consultants
6. Or professional experts
11. Expert Opinion
The specialist are able to make better economic
forecast because they have more data available
and more forecast data available.
Occasionally, companies will invite the group of
experts to prepare a forecast.
They will exchange their views on products and
produce a group estimates or forecast.
By analyzing this opinions company can forecast
about its product.
12. Expert Opinion:
Advantages Disadvantages
1. Forecast can be
made easily and
speedily.
2. It is more accurate.
3. It is useful when
past record of sales
is not available.
4. Expense of this
method is much less
than other methods
of forecasting
1. The main
disadvantage is the
reliability of
forecasting is
doubtful because it
is based on opinions
and suggestions
and not on actual
facts.
13. Past Sales Analysis
Sales forecasts can be developed
on the basis of past sales.
One of the method of this is
"Time Series Analysis".
Time series Analysis consists of
Breaking down past time series into
four components as per below. 1.trend
2.cycle
3.seasonal
4.erratic
14. 0 1 2 3 4 5 6 7 8 9 10
Years
80
70
60
50
40
30
20
10
Time Series Analysis
Actual Projected
15. 0 1 2 3 4 5 6 7 8 9 10
Years
80
70
60
50
40
30
20
10
Analogous Product
New Product
Time Series Analysis
Analogous Products
16. After this, projecting the next period's sales by
combining an average of past sales and the most
recent sales.
Statistical methods of forecasting ,project historical
information into the future.
statistical methods of forecasting are based on the
assumptions that future patterns tend to be
expansions of past ones and that one can make
useful predictions by studying the past behavior.
Eg: One might forecast that next year sales
would be a function of sales in the existing
year or alternately next year sales would be
a function of this year’s sales and the
change in sales between this year and last
year.
18. Market-Test Method
when buyers do not plan their
purchase carefully or experts are
not available or reliable, a direct -
market test is desirable.
A direct market test is especially
desirable in forecasting new
product sales or established
product sales in a new distribution
channel.
