1. Demand Analysis & Sales Forecasting
By
Mr. Mohan s. sose (64)
DEPARTMENT OF PRODUCTION ENGINEERING
KONKAN GYANPEETH COLLEGE OF ENGINEERING,
KARJAT
UNIVERSITY OF MUMBAI
2. Market Segmentation Approaches
• What are the criteria for a good market
segment?
• What are the primary bases of segmentation
used in B2B marketing?
• When are they used?
• How is the market segmented in your
industry?
3. Types of Forecasts
Sales Forecast
Market Potential
Industry Sales
Sales Potential
Market Forecast
(Market Demand)
4. Questions
• Why do we need to estimate market demand?
• What are the uses for sales forecasts? Why is
it important that they are as accurate as
possible?
5. Examples of Forecasts Used in
Business Marketing
Sales Management Decisions
• Assessing market
opportunity & allocating
resources
• Evaluating competitive
performance
• Planning for manufacturing
and inventory
• Assessing the size of the
sales force
Type of Forecast
• Market potential & market
forecast
• Sales potential
• Sales forecast
• Sales forecasts
6. Forecasting Approaches:
Top-Down
• Forecast of general
economic & business
conditions for country
• Market potential for
relevant industry
• Factors affecting
company’s share of
total industry sales
• Sales potential for
company as % of
industry sales
• Company sales forecast
• Zone, region, district,
territory & account
forecasts
7. Forecasting Approaches: Bottom-Up
• Sales person’s forecast
of accounts
• Combined into territory
forecasts
• Combined into District,
Region, Zone forecasts
• Company Sales
Forecasts
8. Determining Market & Sales
Potential
• Statistical Series
– Assumes there is a good relationship between demand
and statistical series
Example: # employees and number of uniforms
– Single Series Method
• Based on NAICS or market segments
• Steps
– Select Statistical series
– Relate series to demand through usage factor
– Estimate series for desired time period
– Potential = usage factor X value of series for year
– Multiple Series Methods – for more complex demand
• Multiple regression techniques
9. Determining Market & Sales
Potential
• Market Research
– Uses
• Estimate demand from few buyers
• Estimate demand for new products
• Supplement data from statistical series
– Methods
• Surveys – Institute for Supply Chain Management
– Manufacturing -- http://www.ism.ws/ISMReport/MfgROB.cfm?navItemNumber=12942
– Non-Manufacturing -- http://www.ism.ws/ISMReport/NonMfgROB.cfm
• Focus groups
• Customer visits
10. Forecasting Methods:
Association/Casual & Time Series
Association/Causal
• Correlation
• Regression Models
• Leading Indicators
– http://www.newyorkfed.org/res
earch/national_economy/
• Econometric Models
• Input-Output Models
– http://www.bea.gov/industry/
Time-Series
• Moving Averages
• Exponential Smoothing
• Adaptive Filtering
• Time-Series Extrapolation
• Times Series Decomposition
• Box-Jenkins
12. Summary
• Demand Analysis (Market Potential) and Sales
forecasts are used throughout the organization
• Choosing a forecasting technique is based on:
– Who and how it will be used
– Time frame
– Data available
– Costs/Benefits
• Various methods may be used, but should
combine top-down & bottom- up
13. Problem
• Biomedical researchers at a Midwest medical school
notes that jaundice is seen in approximately 60
percent of infants. To quickly diagnose the problem,
the researchers have developed a device that
provides a one-handed test for jaundice. A key
benefit from the product is for dark-skinned infants.
How would you assess the market potential for this
product?
