Marketing Forecasting : Business Forecasting

Target is the second biggest retail company after Walmart. Native New Yorker, George Draper Dayton first built a company named Dayton Dry Goods Company in 1902 in the Minneapolis area which is now known as target headquarter. Walmart faced the out of stock issue problem last year and now their biggest competitor, Target, also has faced the same problem this year. Target has a problem keeping the availability of the product in their stores in Canada. It resulted in a huge loss of money and closing down their stores. The CEO of Target said that this is a serious problem and must been solved.

Forecasting is part of a company’s future planning as it attempts to estimate future demand for its product or services. Forecasting is usually measured in specific time periods (months, weeks, etc), given a desired level of accuracy, and assigned a unit of forecasting (sales in units or dollars) (Download Reports 2011). PepsiCo bases its sales forecasts on two main factors: changes in consumer tastes, particularly the rise health consciousness among consumers; and how legal regulations may impact operations, such more federal and local laws

The current demand forecasting method is based on qualitative techniques more than quantitative ones. If the forecast is not accurate, the company would carry both inventory and stock out costs. It might lose customers due to shortage of supply or carry additional holding costs due to excess production. If the actual demand doesn’t match the forecast ones, and the forecast was too high, this will result in high inventories, obsolescence, asset disposals, and increased carrying costs. When a forecast is too low, the customer resorts to a competitive product or retailer. A supplier could lose both sales and shelf space at that retail location forever if their predictions continue to be inaccurate. The tolerance level of the average consumer

Trend Analysis is attempting to spot a pattern in information that is collected. Trend analysis is mostly used to predict future events, although another good use is to review and estimate the situation of past events.

* Now, assume you have acquired some time series data that would enable you to make short, medium, and long term forecasts. Ascertain the quantitative technique that will provide you with the most accurate forecast. Provide a rationale for your responses

* Forecasting is an impartial strategic ingredient that will ensure apt base for reputable planning. Our forecast is always the first step in developing plans in running the business along with our future plans of growth strategies. With this tool, we are able to anticipate our sales within reason that then can allow for us to control our costs in conjunction with inventory which will then help us to enhance our customer service. Sales forecasting is a vital strategic tactic in our company’s methodology.

3. Market Share: forecasting will help in identifying the size of the market share and market potential will aid in the manufacturing and distribution process. Will also aid in proper utilization and eliminate waste.

Forecasting is the methodology utilized in the translation of past experiences in an estimation of the future. The German market presents challenges for forecasting techniques especially for its retail segment. Commercially oriented organizations are used to help during forecasting as general works done by academic scientists are not easy to come across (Bonner, 2009).

Working with the strong information system, headquarters of 7-11 can give timely response to consumer’s needs and develop new products & services accordingly. The owners of 7-11 stores benefit from the devised targeted marketing strategical system in sales forecast so that they can learn more about the characteristics of the business district in which the stored are operated which leads to the accurate placement of orders, minimization of inventory and improvement of operation standards and overall

It is a fairly universal strategy to examine past and present trends in order to forecast the future. This can be commonly observed in everyday existence, as people rely on previous climate trends and recent weather phenomenon in order to make decisions such as how to dress and mode of transportation to use to go to work. Likewise, by employing the use of past and present data and trends, policymakers can make predictions of the future in order to create more effective policies, as well as find better “prescriptions” to solve existing problems (Lecture, 4/1/2010). There are existing neo-Malthusian theories, such as those made by Donella Meadows, et al., that the current trends, including increased population growth, subsequently

M&L Manufacturing Company is an example of a company that could benefit from forecasting. In the past the company has made an educated guess to determine necessary production for

But even this is not possible in case of a new product or innovation. A forecast of sales, demand, cash, requirements and several such business valuables are extremely essential for a business in order to be able to appropriately plan and conduct its operations in an effective and efficient manner. Yet, forecasts cannot be made accurately as there are several factors and changes in the current environment that leads to variations in forecasts and impacts or causes a manager to make changes in the forecasts.

Before, the concept of demand forecast was to serve the key functional groups in achieving their own interest. Facing the new challenges, forecast needed to be more accurate. And therefore it needed a new concept that is to have a consensus forecasting that would accurately reveal market demand and align the needs of key actors in the forecasting process. Leitax implemented two specific changes in forecasting process. The first one is to switch the focus from sell-in to sell-through and second one is to ignore capacity constraints.

The second major section in the evolution of management is the contemporary approach. The contempary approach has four types of management that have developed from the time period around World War II to present time. One of the approaches to contemporary management is quantitative management. Quantitative management uses math problems to help management with decisions and problems. Managers typically do not rely on this type of management as a primary approach to decision making. Many managers rely on their experience or intuition and use this only as a way to compare alternatives or eliminate weaker options. Another type of contemporary management is organizational behavior which began to take place during the human relations time period. The basis for this type of management is that worker productivity and organizational success is based on more than satisfaction of economic or

Business forecasting is the process of studying historical performance for the purpose of using the information gained to project future business conditions so that decisions can be made today that will assist in the achievement of certain goals. Forecasting involves taking historical date and using it to project future data with a mathematical model. Forecasts are extensively used to support business decisions and direct the work of operations managers. In this paper I will introduce different types of forecasting techniques.