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Unit II: Demand Forecasting
Unit II: Demand Forecasting
Demand forecasting
G2 & G5 September
Demand Forecasting
Demand forecasting is a tool to
scientifically predict the likely
demand of a product in the future
Demand forecasting is an estimate of
sales in dollars or physical units for a
specified future period under a
proposed Marketing Plan
American Marketing association
2
Categorisation
[level , Time & Nature of
Goods]
Techniques of Demand
Forecasting
What do people say?
What do People Do?
What have people Done ?
A.Latha .,MBA., M.Phil
G2 & G5 September
Factors determining
Forecasting Methods
Subjective methods of
Forecasting
Consumer Opinion survey
[senses survey, Sample survey, stratified
sampling, Questionnaire , Interview
schedule ]
Sales Force Composite
Experts Opinion method [ Group
Discussion & Delphi Techniques]
Market simulation
Test Marketing
6
Quantitative Methods of
Demand Forecasting
Trend Projection
[ General Pattern of change in
the long run]
G2 & G5 September
Trend Projection
Secular Trend [ change occurs
during the long [period ]
Seasonal Trend [seasonal variations
with in a year]
Cyclical Trend [cyclical movement of
the demand]
Random Events [ Random Variations]
10
11
GRAPHICAL METHOD
Year
1995
SALES IN
CRORES
40
1996
50
1997
44
1998
60
1999
54
2000
62
12
Graphical Method
13
Smoothing Techniques
Moving Average
Weighted Average
Exponential smoothing
14
Feb
June
July
Agu
Sept
Oct
180
200
100
80
120
150
90
120
110
50
15
Other techniques
Barometric Techniques
Simultaneous Equation method
16
Barometric Techniques
Construct an index of relevant
economic indicators & forecast
future trends on the basis of these
Indicators.
17
Barometric Techniques
The leading series [Baby powder]
Concurrent series
The lagging series
18
Econometric Techniques
It can be defined as the social
Science in which the tools of
economic theory , Mathematics &
Statistical Inference are applied to
the analysis of economic Phenomena
19
Econometric Techniques
[ Regression Analysis , Multiple
Regression Analysis ]
It attempts to assess the relationship
between at least two variables (one or
more independent and one dependent),
Quantum of Sales = (Price)a +
(Advertising)b+ (Price of the rival
products) c + (Personal disposable
income Y + u
20
Limitations of Demand
Forecasting
Change in fashion
Consumer psychology
Uneconomical
Lack of Experts
Lack of past data
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