Forecasting in Marketing – What Methods to Use

Forecasting is often the cause of controversy. Some use this tool infrequently and very carefully, while others rely on it completely and do not make any important decisions without analysis. What is forecasting, who needs it and what tools to use to find the “golden mean” for making plans? Let’s figure it out with “Exactly”.

Why make forecasts in business

Forecasting in marketing is the determination how to build phone number list of trends and tendencies in a constantly changing environment. It is the basis for building a marketing strategy and developing a business in general. Forecasts are need by companies of any size: be it a small private production or a large state enterprise.

The purpose of forecasting is to identify positive and negative factors that may affect the company as a whole, its individual products, or changes in demand. Forecasts can help answer the following questions:

What sales should we expect over the next 12 months?

In which months should you produce more products due to increase sales?
How many new clients can a company attract if its advertising budget increases by 20%?
What results can you expect from your upcoming marketing strategy?
Before forecasting, it is important to define precise goals – why the company needs it and what problems it will help solve. Only after that, the appropriate type and method of research is selecte.

Types of forecasting

There are 4 main types of forecasting: long-term, medium-term, short-term and operational.

Long-term — compiled for five or more years. Typically usd in large companies for detailed market research, risk identification and general market trends. During the study , the volume of demand, product requirements, demographic and socio-economic factors that can affect the market and the company are studie. The data obtained helps set large-scale goals and determine the development vector of the company as a whole.

Medium-term

is drawn up for a period of 1 to 5 years. Its purpose  is to identify trends and changes that may affect the company’s strategic sababbin motocin wasanni da kekuna aiki kuma suna decisions. For example, a possible change in consumer demand for certain goods or services, the demand for new products on the market is determine. This helps to change the strategy in a timely manner .

Short-term

covers a period from several months to a year. The exact time intervals of forecasting are always determine by the industry and the purpose of planning. It is aim at analyzing the nearest events and short-term changes, forecasting the sales volume of certain products, demand for them and identifying the expecte result from marketing activities.

Operational — covers a short period awb directory of time up to one month, but is generally of a permanent nature. It is call regular monitoring of important indicators that will help make the right management decisions even if short-term planning was carried out a long time ago.

Forecasting methods in marketing

Factual – includes the collection and analysis of data that can be express in numerical values. For example, it is determine how many clients were attract by advertising campaigns over the past six months.
Expert – base on information from experts, their personal experience, hypotheses and assumptions.
In turn, factual forecasting methods are divide into:

Extrapolation

base on the analysis of current trends and their transfer to the future. We will talk about them in more detail below in a separate block.
Systemic-structural – base on the definition and clarification of interrelations. These include morphological analysis, network modeling, matrix method and others.
Leading information – aim at identifying and analyzing information that can significantly affect the market and the organization.