Marketing Maangement - Demand Forecasting

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Marketing Maangement - Demand Forecasting

Demand forecasting is an assumption of demand in future. By using demand forecasting, a company makes suitable plans for upcoming challenges or demands and takes suitable action to tackle that them.

Demand forecasting can be divided into the following two major types −

Short run forecasting − is made to fulfill short-term targets, like preparation of suitable sales policies to increase the sales or proper planning for inventory as per the required demand.

Long run forecasting − is assumption made for long-term targets like planning of capital or assets.

Short run and long run demand forecasting is used as per the requirement of the enterprise. These forecasting types are explained in further section.

Steps in Demand Forecasting
Following factors should be considered for assumption and fulfillment of short and long term demand forecasting.

Identifying the most relevant method for forecasting.

Predicting factors involved, which affect the demand of the product.

Acquiring the data about the factors that affect demand.

Finding the most suitable relation among independent variables and dependent variables.

Preparing the demand forecast and analyzing the results.

Demand forecasting can be accomplished by following the above steps.

The tools or methods used to forecast demand are of the following two types −

Quantitative techniques

Qualitative techniques

Quantitative Techniques
These techniques are used for both short run and long run forecasting; however, for short and long run forecasting, this method can further be sub divided as per forecasting type. The following are the tools for short-run forecasting −

Moving Average Method
This method is used to plot a trend in the demand. In this, average demand of different time frame is taken (for example, 2 years, 3years, etc.) for getting an assumption of future demand.



Source: https://www.tutorialspoint.com/marketing_management/marketing_management_demand_forecasting.htm