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FORECASTING

MARKET
the set of all actual and potential buyers of a product

INDUSTRY
a group of firms that offer a product or class of products that are close substitutes for each other


Market Potential
industry sales under ideal conditions - e.g., if all members of a market made a purchase

Sales Potential
company sales under ideal conditions - note that this is related to such issues as market share

Market Forecast
expected industry sales over a given period of time under a given set of conditions

Sales Forecast
expected company sales over a given period of time under a given set of conditions

Note that market potential and market forecast have to do with an entire industry; sales potential and sales forecast have to do with an individual company.


FORECASTING METHODS

QUALITATIVE:
assume that someone knows the answer; all you have to do is ask them

  • Survey of Expert Opinion
  • Survey of Buyers' Intentions
  • Salesforce Composite
  • Delphi Technique (long term)

QUANTITATIVE:
based on numerical relationships

  • Time Series/Trend Analysis
    use of historical sales data to find patterns to predict future behavior
  • Leading Indicators/Relational
    use changes in one variable to predict changes in another
    • housing starts lead refrigerator sales by a few months
    • births lead elementary school enrollments by a few years, lead college enrollments by a few decades
  • Market test launch the product in selected markets and use sales to predict performance in other markets


15 JUL 05