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FORECASTING MODELS AND METHODS

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FORECASTING MODELS AND METHODS

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  1. FORECASTING MODELS AND METHODS Adapted from lecture notes by Dr. Michael Geurts

  2. New Products • 1. Buyer intention surveys: • Definitely will buy • Highly possible • As likely as unlikely to buy • highly doubtful to buy • Definitely will not buy • 2. Test markets

  3. New Products • 3. Flow through or economic study • 4. Diffusion models = rate of adoption imitators/innovators (Bass, Gopertz) • 5. Product comparable

  4. New Products- con’t • 6. Judgmental models = expert guess, Delphi • 7. New product models like dumps: • Durability • Number of potential Users • Number of Major competitors • Number of Potential customers • Proportion made aware [ MARKET Share ]

  5. New Products- con’t • 8. Conjoint analysis = determine value of product attributes an estimate market share. • 9. Trend/fashion forecasts = Innovators

  6. Existing Product Sales • 10. Business activity = capacity being used • 11. Time series = past data patterns • a. exponential smoothing • Apply exponential decreasing level of observations further in the past • b. Box-Jenkins • ARMA – stationary, but dependence on past • ARIMA – not stationary, need to remove trend/seasonality

  7. Existing Product Sales • 12. Response models = Sales and marketing mix variables (Logit models when dependent = 0 to 1) • 13. Econometric models = Using economic indicators • 14. Salesmen composite = Summation of salesman forecast for her territory • 15. Logistic regression = combination of marketing mix variables and time series forecasts.

  8. Other Forecasting Methods • 15. Technological • 16. Combining forecasts • 17. Partitioned data • 18. Regression • 19. Interest rates • 20. Economic Growth

  9. Role of Data • Bad • Past • Other forecasts • Uses of Forecasts • Budgets • Production quantities • Inventory control • Planning • Bank loans • Identify effect of problems or promotions. If the forecasting has been accurate and the company runs a promotion. The company can measure the effects of the promotion as the difference between forecast and actual.