DEMAND

FORECASTING
Measuring and Forecasting Demand
Difference between GUESS and an EDUCATED GUESS
 The Market
1. Potential Market – these are those who express some level of interest in a product.
2. Available Market – it is the subset of the potential market who have interest,
income, and access to the product.
3. Qualified Available Market – this is a further refinement of the available market
since it may be possible that those who have interest, income, and access,
nevertheless cannot get the product due to technical issues such as laws.
4. Served Market – also known as the servable available market. This is the market
that the company can actually service with its current state of logistics.
5. Penetrated Market – this is the subset of the market that is already actively using
the product.
Market Demand
It is the total volume of the sales that is generated by a defines
customer group in a defined geographical area, time period, and
marketing environment under a defined marketing program.
Forecasting Demand for an Existing Product
If the firm already has an existing product in the market, then estimating what the future demand
for the product would be a matter of assessing the following:
1. Listening to what people say. This includes salesforce opinions, expert opinion,
and buyers’ opinions.
2. Assessing what people have done. This generally involves the statistical analysis
of past- sales data.
3. Salesforce Opinion. Generally involves getting a composite of what each sales
person, sales team, or sales unit estimates to be possible sales volume for the
upcoming period based on past history.
4. Expert Opinions. Regarding the potential market size and the acceptability of
the proposed product can be taken from industry watchers or people with
experience in the industry.
Forecasting Demand for an Existing Product
If the firm already has an existing product in the market, then estimating what the future demand
for the product would be a matter of assessing the following:
5. Time Series Analysis. Uses data from previous periods to forecast the following
period’s sales.
6. Regression Analysis. It works by using statistical models to determine the
correlation between a hypothetical cause and the effect , again based on historical
data.