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Forecasting Future Demand
Forecasting is the process of estimating future demand by anticipating what customers are likely to do given a certain set of conditions. Forecasting can give you an advantage over your competitors during periods of market change.
Unfortunately, very few products, services, industries or markets are easy to forecast. This is because very few markets follow consistent cycles and there are a range of external and environmental factors that can cause changes to market demand. The more unstable the market, the better your forecasting will need to be.
The way to counter this is to have projections for a range of different circumstances. These projections can be based on indicators such as interest rates, inflation, market trends, changing consumer tastes and unemployment. Therefore, you can plan for and have strategies prepared to either survive tough times or be aggressive and increase your market share.
The benefits of conducting realistic forecasting are that you can reduce surplus inventory whilst ensuring that you have enough stock to meet demand. This means that you can avoid the costs associated with having excess or wasted stock as well as capitalise on making as many sales as possible.
There are a number of methods that you can implement in order to forecast the future market demand. Customer surveys will allow you to gain an understanding of what your customers believe the future holds for them, your business and the market. Analysis of the leading market indicators, expert opinion and past sales analysis can also help you to forecast future market demand.