Demand Forecasting

( Consumer Survey
Method )
By:
AB-9001
AB-9007
AB-9008
AB-9010
AB-9017
AB-9021
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 price
In a given market and
During a particular period of time
Forecasting : Estimating the future course of
events with a reasonable degree of accuracy.
Demand Forecasting
Demand 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
Forecasting
Micro 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
Forecasting
Ø Sales Forecasting.
Ø Production Planning.
Ø Control of business.
Ø Inventory control.
Ø Growth and long-term investment programmes.
Ø Economic planning and policy making.

Steps of Demand
Forecasting
Demand 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.
2.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 factor
b)Cyclical factor
c)Seasonal factor
d)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
FORECASTS
MICRO AND MACRO-FORECASTS
ACTIVE AND PASSIVE FORECASTS
CONDITIONAL AND NON-CONDITIONAL
FORECASTS
SHORT-RUN AND LONG RUN FORECASTS

Techniques of Forecasting
Characteristics of Consumer
Survey Method
User /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 Method
The 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
survey
1.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.
10.
Techniques of Consumer
Survey Method
The 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 consumer
2.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?
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?
Merits
It 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.

Demerits
Many 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