Lesson 3: Demand Forecasting.

What is called Demand Forecasting?

Demand forecasting is the process of using predictive analysis of historical data to
estimate and predict customers' future demand for a product or service. Demand
forecasting helps the business make better-informed supply decisions that estimate the
total sales and revenue for a future period of time.

Kristina Lopienski (june 27 2019). "What is Demand Forecasting? Importance and

Benefits of Forecasting Customer Demand" Shipbob retrieved form
https://www.shipbob.com/blog/demand-forecasting/

Measuring and Forecasting Demand

If you have a new product idea in mind and you intent on putting together a business
to bring it to the market, then one of the first thing you need to know is how big your
potential market would be.

 “Television won’t last. It’s a flash in the pan.” Said Mary Somervilla, a pioneer of
radio broadcasting in 1948.
 “The horse is here to stay but automobile is only a novelty.” Said an Investment
banker in 1903 when asked about the viability of investing in the Ford Motor
Company.

The Market
- The market for a product can be categorized as follows:
Potential Market- those who express some level of interest in a product.
Available Market- People who have interest, income, and access to the product.
Qualified Available Market- A further refinement of the available market because it
may be possible that those who have interest, income, and access, nevertheless cannot
get the product due to technical issue such as laws or distribution constraints.
Served Market- Also known as the serviceable available market. The market that the
company can actually service with its current state of logistic.
Penetrated Market- This is the subset of the market that is already actively using the
product.
The Market Demand- Total volume of the sales that is generated by a defined
customer group in a defined geographical area, time period, and marketing
environment.

Forecasting demand for an existing product:

Listening to what people say.

Assessing what people have done.
Salesforce opinion.
Expert opinion.
Time series analysis.

Conclusion:

Our lesson is about the demand forecasting and its importance on the business
community. This let us estimate the possible demand that the people will want to our
new product. It is a process of calculating the history of the product, asking what people
want in their life and how the company will plan to sell the product. The reason why
business do this process it to maximize the profit that they can get and minimizing the
possible loss of money when creating a new product. They can lose money if they
overestimated the demand by creating too much and exceeding the demand which
would mean a lowering of price to sell it of by storing the product while the other is being
consumed by the customer. While if they guess the demand right they can have the
maximum profit without losing the money they invest.