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Demand Forecasting
Demand Forecasting
1. Time factor
2. Level of forecasting
3. General or Specific forecasting
4. Problems & methods of forecasting
5. Classification of goods
6. Knowledge of different market conditions
7. Other factors
1. Time factor
Demand forecasting has to be made for both short
and long periods.
It all depends on the nature of the commodity – Ice-
creams, umbrellas etc – short period, while, in the
case of cement, iron & steel etc long period
forecasting is desirable.
2. Level of Forecasting
Demand forecasting may be undertaken at three
levels firm level, industry level and macro level
Firm level – concerned with particular firm
Industry level – different industry/ trade association
Macro level – forecasting of business conditions in
the entire economy.
3. General or Specific forecasting
If the forecasting is undertaken generally or
total by a firm – general forecasting
If the firms requires commodity wise or area
wise forecasting – specific forecasting.
4. Problems and methods of forecasting
Methods & problems of forecasting the demand
for new products are different from old or
established products.
The old/established product is not at all so
difficult to estimate future demand.
While – it is very difficult to forecast the
demand for new product.
5. Classification of Goods
Demand forecasting are depends on the nature of goods –
producer goods & consumer good – durable & non-durable goods
etc.
6. Knowledge of different market conditions
Demand forecasting is different under different market conditions
Monopoly market – forecasting is easy, since there are no
substitutes or competitors
Monopolistic competition – firm has to face much risk as there are
many substitutes.
7. Other factors
There are some special factors which must also be taken into
account
For example – political factors (elections) sociological factors,
psychology of consumers & pattern of income distribution etc.
Forecasting differs from product to product, time to time & place to
place.
Methods of Demand Forecasting