Demand forecasting

Demand forecasting means estimation of the demand for the good in the forecast period. It is a process of estimating a future event by casting forward past data. The past data are systematically combined in a predetermined way to obtain the estimate of future demand.
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Factors of demand forecasting

How far ahead the long-term forecast goes. Should the forecast be general or specific? Problems & methods of forecasting are usually different for new products from those for products already well established in the market. It is important to classify the 5/17/12 products as producer goods,

Purpose of short-term forecasting

Appropriate production scheduling so as to avoid the problem of overproduction & the problem of shortsupply. Helping the firm to reducing costs of purchasing raw materials. Determining appropriate price policy. Setting sales targets & establishing controls &incentives.

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Purpose of long-term forecasting

Planning of a new unit or expansion of an existing unit. Amulti-product firm must ascertain not only the total demand situation, but also the demand for different items separately. Planning long-term financial requirements. As planning for raising funds requires considerable advance notice ,long term sales forecasting 5/17/12

Short-term forecasts short-term forecasts, involving a period up to twelve months. Medium-term forecasts medium-term forecasts, involving a period from one to two years. Long-term forecasts long-term forecasts, involving a 5/17/12 period of three to ten years.

Importance of demand forecasting

Demand forecasts are necessary since the basic operations process, moving from the suppliers' raw materials to finished goods in the customers' hands, takes time. Most firms cannot simply wait for demand to emerge and then react to it. Instead, they must anticipate and plan for future demand so that they can react immediately to customer 5/17/12 orders as they occur. In other words,

Judgmental methods

Surveys This is a "bottom up" approach where each individual contributes a piece of what will become the final forecast. For example, we might poll or sample our customer base to estimate demand for a coming period. Alternatively, we might gather estimates from our sales force as to how much each salesperson expects 5/17/12

Census methods

As an alternative to the "bottom-up" survey approaches, consensus methods use a small group of individuals to develop general forecasts. In a Jury of Executive Opinion, for example, a group of executives in the firm would meet and develop through debate and discussion a general forecast of demand.
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Delphi methods

In this technique, a panel of technical experts is presented with a questionnaire regarding a forecast. The answers are collected, processed, and re-distributed to the panel, making sure that all information contributed by any panel member is available to all members, but on an anonymous basis. Each expert reflects on the gathering 5/17/12 opinion. A second questionnaire is

Customer Surveys are sometimes conducted over the telephone or on street corners, at shopping malls, and so forth. The new product is displayed or described, and potential customers are asked whether they would be interested in purchasing the item. While this approach can help to isolate attractive or unattractive product features, 5/17/12 experience has shown that "intent to

Consumer Panels are also used in the early phases of product development. Here a small group of potential customers are brought together in a room where they can use the product and discuss it among themselves. Panel members are often paid a nominal amount for their participation. Like surveys, these procedures are more useful for 5/17/12 analyzing product attributes than for

Test Marketing is often employed after new product development but prior to a full-scale national launch of a new brand or product. The idea is to choose a relatively small, reasonably isolated, yet somehow demographically "typical market area. The total marketing plan for the item, including advertising, promotions, and distribution tactics, 5/17/12 is "rolled out" and implemented in

Scanner Panel Data procedures have recently been developed that permit demand experimentation on existing brands and products. In these procedures, large set of household customers agrees to participate in an ongoing study of their grocery buying habits. Panel members agree to submit information about the number of 5/17/12 individuals in the household, their

Econometric models , such as discrete choice models and multiple regression. More elaborate systems involving sets of simultaneous regression equations can also be attempted. These advanced models are not generally applicable to the task of forecasting demand in a logistics system.
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Input-output models estimate the

Life cycle models look at the various stages in a product's "life" as it is launched, matures, and phases out. These techniques examine the nature of the consumers who buy the product at various stages ("early adopters,""mainstream buyers," "laggards," etc.) to help determine product life cycle trends in the demand pattern. Such models are 5/17/12 used extensively in industries such

Time series approach

SIMPLE MOVING AVERAGE In a moving average, the forecast would be calculated as the average of the last few observations. If we let M equal the number of observations to be included in the moving average, then: Z t+1 =1/M i=t+M-1 Z i For example, if we let M=3, we have 5/17/12 a "three period moving average",

Simple exponential smoothing

A popular way to capture the benefit of the weighted moving average approach while keeping the forecasting procedure simple and easy to use is called exponential smoothing, or occasionally, the exponentially weighted moving average. In its simple computational form, we make a forecast for the next period by forming a weighted 5/17/12 combination of the last observation

Where is a parameter called the smoothing coefficient, smoothing factor, or smoothing constant. Values of are restricted such that 0 < < 1. The choice of is up to the analyst. In this form, can be interpreted as the relative weight given to the most recent data in the series.
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Product plan

Executive Summary [Background of problem and vision of solution.]

Objectives

[Business objectives for this product. e.g. how much revenue, market share.]

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Target Customers and Market Analysis

Positioning, Value Proposition (Benefits) Features Sales and Marketing Strategy -How will you reach the target audience with your messages, and who will they buy from? Financial/Business Case

Rough estimates show that we could sell into Q at the rate of x per month/quarter/year. This is a 5/17/12

Competitive Products

A Sentence that describes why were unique - e.g., cost, platform, etc.. List competitors and price ranges. The closest competing products functionally would be those list why. Expand on why were special compared to competition.
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Product Schedule

The preliminary development schedule has been estimated/completed. Describe other schedule issues, opportunities for each department and only critical path departments or components.

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Target Customers For primary customers, Identify key influencers, decision maker, and economic buyer Describe who they are, their role in the business, the process they currently use, how this product will change their life and any other important information about their 5/17/12 company, expected plans, etc.

Target Users Identify primary user Describe who they are, their role in the business, the process they currently use, how this product will change their life and any other important information about their company, expected plans, etc.
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Identify secondary user

Product Description & Positioning Statement

Product Concept and History, Features, Functions, & Benefits

Market Data, Competitive Products, and Analysis

Competitive Products Overview Competitive Strengths, Weaknesses & Response Statements
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Financial Data/Business Model Sales & Distribution Partner Programs Go to Market Plan Development Plan Overview
Tech Support

Pricing ,Financial Projections

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Operations Plan Overview Tech Support Customer Service

Sales Operations

Data Center/NOC

Overview activities needed to support delivery of the product and/or web site; when these activities need to begin and be 5/17/12

Product Schedule: Major Milestones Product Team (Roles and Responsibilities)

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Product differentiation

Form-size,shape,or physical structure of the product. Features-new features can be introduced by calculating customer value versus company cost. Performance quality-it is the level at which the products primary characteristics operate. Conformance quality-the degree to 5/17/12 which all the product units are

Durability-measure the products expected operating life under natural conditions. Reliability-measure of the probability that the product will not malfunction or fail within a specified time period. Repairability Style
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Product deletion

Slow sales or low profit or unprofitable products, new technologies ,better competitive product, obsolete technologies lead to product deletion.

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Future of product management

The product manager will have to incorporate the Web in their plans Increased use of data and information technology in the future The increased emphasis on brands Changes in balance of market power in favor of retailers . Increased importance of customer retention programs 5/17/12

Finally increased global competiton.

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