What is Demand Forecasting?
Demand forecasting refers to the scientific and systematic estimation of the demand for a particular product in the future. Customer demand is highly dynamic and unless companies correctly chart out the demand patterns and determine the number of goods to be produced, the chances of overstocking or understocking of goods are likely to occur. Leveraging demand forecasting techniques also helps companies to identify what customers are buying and improvise on products that are not faring well in the market.
Request a free proposal to know how our analytics solutions can help plan demand forecasting for your business.
Demand Forecasting Methods
Adopting demand forecasting methods helps companies to cope with seasonality, sudden changes in demand levels, price-cutting maneuvers of the competition, strikes, and other major swings of the economy. Here are some of the top demand forecasting methods that can help companies plan their production cycles smartly.
This is one of the most effective demand forecasting methods that use mathematical principles to predict consumer behavior based on current or historical data. Predictive analytics leverages data on how a company’s products appeal to and interact with the customers. This analysis involves the interpretation of consumer trends and making assumptions based on recent/past trends. One of the major drawbacks of such demand forecasting methods is that the extrapolating current data doesn’t give insights into the future because of unforeseen problems that may occur.
The Delphi method is known to be one of the oldest demand forecasting methods used. In this technique, experts are surveyed anonymously. The survey includes several rounds, and after each round, a summary is formed, which is then converted into another question. These summaries and questions are then handed over to the experts, which can either sway their opinion or they can have it remain the same. This process is repeated multiple times until the experts arrive at a consensus on the decision.
Want to know how to keep up with the latest advanced analytics trends in your industry? Contact our analytics experts now!
Client Intent Surveys
Such demand forecasting methods are undertaken to identify what the customer intends to buy in the future. This is especially useful if the company is planning on introducing a new product to the market. You might often come across such surveys before entering a company’s website or accessing certain video contents. The questions are usually in the form of a scale to evaluate how likely their chances of are of purchasing a particular product.
It is important for companies to identify the most important attributes that consumers are considering when buying a product. Trade-offs are common in the case of most goods, hence, it is important that they identify why consumers are picking a certain product and what they value the most. Using demand forecasting methods, such as conjoint analysis, businesses can collect data on the most favorable attributes of an item, which will help find out what exactly consumers value more. They do this by having consumers rank their preferences of features, which then is translated into a report by an analyst that shows what customers prefer.