Question: Let’s say you work for a company that makes prepared breakfast cereals like corn flakes. Your company is planning to introduce a new hot breakfast product made from whole grains that would require some minimal preparation by the consumer. This would be a completely new product for the company. How would you propose forecasting initial demand for this product?
Demand forecasting refers to using predictive analysis of historical data to estimate and predict customers’ future demand for a product or service.
An initial demand forecasting for a brand new product will be an actual forecast from a previous period, the actual demand from a previous period, or it is estimated by averaging all or a part of the past data.
The best step to require in forecasting initial demand for a brand new product is to use sales volumes of existing products and services. This method is especially useful since a brand new product could be a variation of an existing product.
For example, a brand new hot breakfast product made of whole grains will require some minimal preparation by the consumer. Since it is a brand new product within the line of breakfast cereals, their variations can be available in the form of a distinct color, size, or flavor to extend marginal utility, bearing in mind that the market segment continues to be identical. Based on this forecast, you'll make sales projections.
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