An

activity of determining qty. of goods to be purchased in Future Necessity for forecasting Demand

Stock Effects Market Response effects

Factors

affecting Demand forecast

Factors involved in Demand Forecasting

How far ahead? a. Long term eg., petroleum, paper, shipping. Tactical decisions. Within the limits of resources already available. b. Short-term eg., clothes. Strategic decisions. Extending or reducing the limits of resources.
1.

2. Undertaken at three levels:

a. b. c.

Macro-level Industry level eg., trade associations

Firm level

3. Should the forecast be general or specific (product-wise)? 4. Problems or methods of forecasting for new vis--vis well established products. 5. Classification of products producer goods, consumer durables, consumer goods, services. 6. Special factors peculiar to the product and the market risk and uncertainty. (eg., ladies dresses)

 Scheduling

of production to avoid problems of over production and under- production. Proper management of inventories Evolving suitable price strategy to maintain consistent sales Formulating a suitable sales strategy in accordance with the changing pattern of demand and extent of competition among the firms. Forecasting financial requirements for the short period.

 Planning

for a new project, expansion and modernization of an existing unit, diversification and technological up gradation. Assessing long term financial needs. It takes time to raise financial resources. Arranging suitable manpower. It can help a firm to arrange for specialized labour force and personnel. Evolving a suitable strategy for changing pattern of consumption.

1. Non-durable consumer goods: 1. Purchasing power disposable personal income (personal income direct taxes and other deductions). Published by C.S.O. 2. Price. 3. Demography: 2. Durable consumer goods: 1. Choice between using the goods longer by repairing it, or 2. disposing it off and replacing it with a new one. 3. Require special facilities for their use, eg., roads for automobiles. 4. Household demand vis--vis individual demand. 5. Family characteristics. 6. Total demand consists of a. New-owner demand and, b. Replacement demand 7. Price and credit conditions.

3. Capital goods: used for further production. Demand will depend upon the specific markets they serve and the end uses for which they are bought. Data required for estimating the demand for capital goods: a. The growth prospects of the user industries. b. The norm of consumption of capital goods per unit of installed capacity. c. The velocity of their use.

 Qualitative

Methods

Unaided Judgements/ Expert Opinion/ Hunch Method Collective Opinion Perdiction Markets Delphi Technique Judgemental Bootstraping Simulated Interactions Conjoint analysis Test marketing

 Buyers

Intentions Consumer Clinics Neuro Science Market Experiments Virtual shopping and virtual Management

 Time

Series Moving averages Leading Indicator method Correlation and regression Equations Extrapolation