Meaning of Demand ForecastingDemand forecasting is the scientificand analytical estimation of demandfor a product (service) for aparticular period of time.It is the process of determining howmuch of what products is neededwhen and where.
Elements of a Good ForecastTimelyAccurateReliableMeaningful Written Easy to use
Criteria for a good forecastingAccuracySimplicityEconomyAvailabilityDurability
Techniques of Demand ForecastingSubjective (Qualitative) methods: relyon human judgment and opinion.Buyers’ OpinionSales Force CompositeMarket SimulationTest MarketingExperts’ Opinion
Techniques of Demand ForecastingQuantitative methods: usemathematical or simulation modelsbased on historical demand orrelationships between variables.Trend ProjectionSmoothing TechniquesBarometric techniquesEconometric techniques
Subjective Methods of Demand ForecastingConsumers’ Opinion SurveyBuyers are asked about future buyingintentions of products, brand preferencesand quantities of purchase, response to anincrease in the price, or comparison withcompetitor’s products.Census Method: Involves contactingeach and every buyerSample Method: Involves onlyrepresentative sample of buyers
Subjective Methods of DemandForecastingOpinion SurveySalespersons are in direct contactwith the customers. Salespersonsare asked about estimated salestargets in their respective salesterritories in a given period of time.Contd…
Subjective Methods of Demand ForecastingTest MarketingInvolves real markets in whichconsumers actually buy a productwithout the consciousness of beingobserved.product is actually sold in certainsegments of the market, regarded asthe “test market”.Choice and number of test market(s)and duration of test are very crucial tothe success of the results.Contd….
Quantitative Methods of Demand ForecastingTrend ProjectionStatistical tool to predict future values of a variable onthe basis of time series data. Time series data are composed of:Secular trend (T): change occurring consistentlyover a long time and is relatively smooth in its path.Seasonal trend (S): seasonal variations of the datawithin a yearCyclical trend (C): cyclical movement in thedemand for a product that may have a tendency torecur in a few years
Quantitative Methods :Barometric TechniquesBarometric Technique alerts businessesto changes in the overall economicconditions.Helps in predicting future trends on thebasis of index of relevant economicindicators especially when the past datado not show a clear tendency ofmovement in a particular direction.Contd….
Limitations of Demand ForecastingChange in FashionConsumers’ PsychologyLack of Past DataUneconomicalLack of Experienced Experts
INTRODUCTION:Engro Foods Started their foods businessin 2006 with the launch of Olpers,Highly passionate about providing millionsof people across the length and breadth ofPakistan with the ultimate brand experienceEngro Foods is among the biggest andfastest growing business in Pakistan with avision to cater to local needs with productsconforming to global standards.
Products of ENGRO FOODS•OLPERS•TARANG•DOBALA•OMORS•DAIRY OMUNG•TARAKA•LASSI•JUICES
FORECASTING TECHNIQUES INENGRO FOODSA combination of three forecastingmethods is used. The methods areused in combination for the purpose ofsales and demand forecasting:-
Qualitative MethodUsing historical data and marketintelligence as a guide, ENGRO FOODSmanagement practices their ownjudgment to determine the demandforecast. A yearly demand plan isforecasted in this way which is thenfurther divided into monthly, weekly anddaily plans accordingly.
Causal MethodCausal forecasting assumes that thedemand forecast is highly correlated withcertain factors in the environment such asthe state of the economy, interest rates,and product pricing that can cause achange in the demand.An example is how by introducing aproduct variant, such as TARANG, caninfluence demand for the original productthat is OLPERS.
Opinion Poll MethodENGRO FOODS collects opinions of thosewho are supposed to possess theknowledge of the market like salesrepresentatives, sales executives,consultants and professional marketingexperts. In this way demand and saleforecasting is done in ENGRO FOODS.
CONCLUSION &RECOMMENDATIONS•Demand forecasting is the scientific andanalytical estimation of demand for a product(service) for a particular period of time.•The engro foods used the opinion pollmethod, qualitative method and casualmethod for their forecasting of demand in themarket.•They should use the trend and smoothingtechniques for the accurate and long termforecasting.