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Demand Forecasting(Consumer Survey Method)
By:AB-9001AB-9007AB-9008AB-9010AB-9017AB-9021AB-9042AB-9046
Demand : Demand is the want for a commodity backed by purchasing power
Demand is quantity of a commodity a consumer is willing to purchase At a given priceIn a given market andDuring a particular period of time
Forecasting : Estimating the future course of events with a reasonable degree of accuracy.
Demand ForecastingDemand Forecasting: Estimating future marked demand
magnitude. On the basis of statistical data and empirical measurement of functional relationship between demand and its determinants.
Demand forecasting is also the foundation of a company’s entire logistics process. It supports other planning activities such as capacity planning, inventory planning, and even overall business planning
Levels of Demand ForecastingMicro level: - It refers to the demand
forecasting by an individual business firm.Industry level: - Refers to the demand
estimate for the product of the industry as a whole. Usually taken by Industrial of Trade Association.
Macro level: - It refers to the aggregate demand for the industrial output as a whole.
Significance Of Demand ForecastingSales Forecasting.
Production Planning.
Control of business.
Inventory control.
Growth and long-term investment programmes.
Economic planning and policy making.
Steps of Demand ForecastingDemand forecasting is a scientific exercise. It has to go through
a number of steps. These steps present a systematic way of initiating, designing and implementing a forecasting system.
1. Identification of objective – Depending on the type of forecast i.e. short and long, objective can be identified
2. Nature of the product and market – Whether the product is consumer good or producer good, perishable or durable, analyzing the demand for finished goods, demand for corresponding raw material and intermediate goods should also be analyzed.
3. Determinants of demand – It depends on economic, demographic and psychological factors.
4. Analysis of factors - demand functions are classified into four factors.
a) Trend factorb) Cyclical factorc) Seasonal factord) Random factor
5. Choice of method – The economist has to choose a particular technique from among the various techniques of demand forecasting depending upon the nature of product and objective of the forecast.
6. Testing accuracy – The testing is needed to avoid the margin of forecasting error and thereby to improve decision making.
Types of survey ECONOMIC AND NON-ECONOMIC
FORECASTSMICRO AND MACRO-FORECASTSACTIVE AND PASSIVE FORECASTSCONDITIONAL AND NON-CONDITIONAL
FORECASTS SHORT-RUN AND LONG RUN
FORECASTS
Techniques of Forecasting
Characteristics of Consumer Survey MethodUser /Consumer/Customer oriented.Short term usage/validity.Its a primary method.By using this method, a firm can ask
consumers what and how much they are planning to buy at various prices of the product for the forthcoming prices usually a year.
Characteristics of Consumer Survey MethodThe most direct method of estimating demand
in the short- run is to conduct the survey of buyers intentions.
The consumers are directly approached and are asked to give their opinions about the particular product.
A questionnaire may be prepared in this regard, which can be mailed to customers or send through field investigators.
It must be simple and interesting so as to evoke consumers’ response.
Process of Consumer survey1. Determine the Objective.2. Determine the resources.3. Determine the population.4. Select the sample (if required).5. Use the right technique for survey.6. Collect the data via the survey.7. Analyze the data .8. Project the forecast considering the
objective.9. Test the accuracy.
Techniques of Consumer Survey MethodThe methods of market survey are as follows: 1. Questionnaire.2. Interview.3. Schedules.4. Personal observation.
Example( Questionnaire)Following heads come under questionnaire:
1. Personal Information of consumer2. Questions 1. What is the profession of the customer? 2. Do the customer already have the
Lenovo PC? 3. What is the purpose of buying the product? 4. What are the requirements you want in the
PC? 5. What is the price range you are looking for?
6.Why Lenovo product?7.How do you come to know about Lenovo
product?8.What are the features you like in Lenovo
products?9.What other features you want to introduce in
our product?10.When would you like to purchase our
product?
MeritsIt is a direct method of assessing information
from the primary sources.It is a simple method as it is not based on past
historical records.Consumer intercepts are usually held to gain a
fast and quick overview.It does not introduce any bias or value
judgment particularly in the census method.
DemeritsMany a times consumers are not answering to the
questionnaire.Wrongly drafted questionnaire may lead to
distortions in the answer which lead to unreliable information.
It becomes difficult for a firm to ascertain number of consumers that intend to buy from that firm.
Utility of these estimates is limited to a period of about one year.
There may be sampling error if the sample is not properly chosen.
It is time consuming and costly.
Media of survey