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Organizational Demand Analysis. Chapter 6. Forecasting. Why is forecasting important?. Organizational Demand Analysis. Market Potential “Maximum possible sales of all sellers of a given product in a defined market during a specific time period.” Sales forecast

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Forecasting
Forecasting

  • Why is forecasting important?


Organizational demand analysis1
Organizational Demand Analysis

  • Market Potential

    • “Maximum possible sales of all sellers of a given product in a defined market during a specific time period.”

  • Sales forecast

    • “Maximum share of market potential an individual company might expect for a certain product or product line.”

  • Example


Forecasting1
Forecasting

  • Where to get information?

    • Internet

      • Census bureau

      • Competitors

      • Customers

        • Issues


Forecasting2
Forecasting

  • Potential for Planning Strategy

    • Forecast helps to plan:

      • Engineering design and implementation

      • Marketing and commercial development

      • External stakeholders

  • Potentials: Planning and Controlling by Segment

    • Segment market

    • Allocate expenditures


Forecasting3
Forecasting

  • Life Cycle Potential

  • Role of the Sales Forecast

    • What does it do?

  • Applying Market Potential and Sales Forecast

    • Market potential

    • Sales forecast

    • Supply chain implications


Determining market sales potentials
Determining Market & Sales Potentials

  • Statistical Series Methods

    • Easy if

    • Example

  • Single Series Method

    • Make sure series is related to demand for product

    • Determine the relationship

    • Estimate future values

      • Independently forecasting

      • Rely on government or industry forecasts

        4. Determining market potential


Market research
Market Research

  • Surveys

    • Advantages

    • Disadvantages

  • Role of Forecasting


Market research1
Market Research

  • Forecasting Methods

    • Qualitative methods (AKA management judgment and subjective techniques)

      • Executive judgment

        • Advantages

        • Disadvantages

      • Sales force composite

        • Advantages

        • Disadvantages

      • Delphi method

        • Advantages

        • Disadvantages


Market research2
Market Research

  • Forecasting Methods

    • Quantitative methods (systematic or objective forecasting)

      • Time series

        • Historical data to project future

        • Components

          • Trend

          • Cycle

          • Seasonal

          • Irregular


Market research3
Market Research

  • Regression or causal techniques

    • Determine relationship between sales and an outside variable

    • Requirements

    • Limitations

      • Spurious relationships

      • Historical data

      • May not work

  • Several methods= Better accuracy