DEMAND FORECASTING
Demand Forecasting
A careful estimate of the
potential market size can be
crucial for ensuring success.
BAD NEWS
There is no way for us to
predict the future with 100%
accuracy. Nobody can predict
the future!
1. “The horse is here to stay
but the automobile is only
a novelty,” said an
investment banker in
1903 when asked about
the viability of investing
in the Ford Motor
Company.
2. “Television won’t last. It’s
a flash in the pan,” said
Mary Somerville, a pioneer
of radio broadcasting in
1948.
3. “There is no reason
anyone would want a
computer in their home,”
said Ken Olsen, head of
the business computer
firm Digital Equipment
Corporation, in 1977. In
that same year, the Apple
II computer was launched,
heralding the phenomenal
rise of home computing.
Predicting the future is purely
an exercise in guesswork.
Properly forecasting demand
for a new product will actually
be a matter of making one’s
guess as objective, as educated
and as scientific as possible.
Types of Market:
POTENTIAL MARKET:
These are those who
express some level of
interest in a product.
AVAILABLE MARKET: It
is the subset of the
potential market which
has interest, income and
access to the product.
QUALIFIED AVAILABLE
MARKET: It is a further
refinement of the
available market since it
may be possible that
those who have interest,
income and access cannot
get the product due to
technical issues or
distribution constraints.
SERVED MARKET: This is
the market that the
company can actually
service with its current
state of logistics.
PENETRATED MARKET:
This is the subset of the
market that is already
actively using the
product.
