1. Prepared by: Hardik Anghan Keval Patel Jay Jasani Sandip Dobariya Demand Forecasting 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. 4. Demand Forecast Survey of Buyers Intentions Composite of Sales Force Opinions Expert Opinion Past-Sales Analysis Market- Test Method 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 forces 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 years sales and the change in sales between this year and last year. 17. One of the examples of past sales analysis. 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. 19. Thank You!