Do you have historical sales data? If so, then you can leverage demand forecasting to your advantage. And with demand forecasting comes the ability to develop a round-about-answer to how many customers you’ll have in the future and their future demand needs. For businesses, demand forecasting is of the utmost importance because it allows them to appropriately designate their resources so that the utmost efficiency is obtained. In doing so, this allows them to increase profit margins while decreasing overhead expenses.
If you’d like to learn more about demand forecasting, please keep reading. You’ll learn of various demand forecasting types, like short-term demand forecasting and passive demand forecasting. You’ll also learn about the value of this type of forecasting and the many types of demand forecasting methods.
Types of Demand Forecasting
Passive Demand Forecasting: This option is aimed at companies that are well established, have a stable and steady income, and operate according to a conservative growth plan.
Active Demand Forecasting: If you run a scaling company or one that is very diversified and have an aggressive growth plan, particularly in terms of your marketing activities, along with an external economic environment, then this type of demand forecasting will work well for you.
Short-term Demand Forecasting: Short-term forecasting is for those that want to see what the next three to 12 months will be like. This is especially favored by those who want to pinpoint seasonal patterns.
Medium to long-term Demand Forecasting: This type of forecasting requires about 12 to 24 to be carried out. Many businesses that take advantage of this type of forecasting actually implement the required services for three to four years. If you’re looking for long-term forecasting, this is what you want. You’ll notice great improvements in your sales and marketing plans as well as enhanced capacity planning and financial planning, too.
External macro-level Demand Forecasting: You’ll use broader market movements to take advantage of this type of forecasting. This is because these movements depend on macroeconomic environments. If you want portfolio expansion, then demand forecasting of this type can help you achieve this goal. It’s also highly recommended to businesses that endure technological disruptions and need to enter into new customer segments.
Internal business level Demand Forecasting: This is the type of forecasting you want if you need to deal with internal operations like financial division, product category expansions or downsizes, sales division, and manufacturing grouping.
Why You Need Demand Forecasting
The importance of demand forecasting should not be undervalued. In fact, it should be at the top of any business owner’s priority list. With this type of forecasting serving as such a pivotal business process, it’s no wonder so many companies already leverage it to their advantage. The top reasons to use demand forecasting are:
- Improve operational planning
- Enhance sales and marketing operations
- Enjoy advanced risk assessments and mitigation plans
- Make financial planning easier and more profitable
- Have better budgeting
Types of Demand Forecasting Methods
There are many types of demand forecasting methods. Six of the most common are:
- SalesForce Opinion
- Market Research
- Quantitative methods
- Trend projection method
- Barometric technique
- Econometric forecasting technique
Do you want more information on demand forecasting. If so, you’re in the right spot. Contact us now!