Forecasting Demand for a New Product.
Joel Dean has suggested six approaches for forecasting the demand for new products.
1. Evolutionary Approach: In this method, the demand for new product is estimated on the basis of existing product. E.g. Demand forecasting of colour TV on the basis of demand for black & white TV.
2. Substitute Approach: The demand for the new product is analyzed as substitute for the existing product.
3. Growth curve Approach: On the basis of the growth of an established product, the demand for the new product is estimated.
4. Opinion Polling Approach: In this approach, the demand for the new product is estimated by inquiring directly from the consumers by using sample survey.
5. Sales Experience Approach: The demand is estimated by supplying the new product in a sample market and analyzing the immediate response on that product in the market..
6. Vicarious Approach: Consumers reactions on the new products are fount out indirectly with the help of specialized dealers.
Factors Affecting Demand Forecasting.
The following are the important factors governing demand forecasting:
1. Prevailing Business conditions (price level change, percapita income, consumption pattern, saving, investments, employment etc..,
2. Condition within the Industry (Price –product-competition policy of firms within the industry).
3. Condition within the firm. (Plant capacity, quality, important policies of the firm).
4. Factors affecting Export trade (EXIM control, EXIM policy, terms of export, export finance etc..,)
5. Market behaviour
6. Sociological Conditions (Population details, age group, family lifecycle, education, family income, social awareness etc...)
7. Psychological Conditions (taste, habit, attitude, perception, culture, religion etc…)
8. Competitive Condition (competitive condition within the industry)