What the toughest job in Sales forecasting. New Product forecasting
FORECASTING NEW PRODUCTS.
So you need to bring new product to market and you need a sales forecast. Well here are some tips for new product introductions.
Let’s take the example of phone handsets, products with a life cycle of 9 months or less.
There are Lots of issues here. For example, Replacement upgrade product (fairly simple as you have experience from previous model). New to Company products (you have not handled this brand before.) And last the hardest of all completely new to market products. e.g. IPhone handset introduction a couple of years ago.
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Reviewing Sales histories for previous models are very helpful and can used to help model sales pattern. Also grouping of the phones is useful as it allows you to pattern/capture trend in the overall data. As we go further up the sales hierachy the data granularity intensifies. The greater detail in the time series data points makes it easier to forecast statistically. Forecasting starts with a blank canvass and drawing from similarities in the past is always useful. So if Samsung always change the model every 8 or months, we can still learn learn from sales of the 1800 Galaxy when forecasting the 1900 Galaxy Europa. This gives the Supply Chain more time to analyse the results and that's what you want. Using Excel to this can be very time consuming and prone to error and spreadsheets are veyr inaccurate.
Totally new products are the most tricky and present the greatest challenge. That's why the latest releast of Forecast PRO is so useful. Forecast PRO version XE latest version has specific new features for NEW PRODUCT Launches.
This includes the BASS Diffusion method for forecasting "New Products" like IPAD where no previous histories or analogous data can be used and the forecast is purely a feel (finger in the wind)
So it's a platform on which to base improvements.
For comparison there Forecast PRO TRAC. TRAC is more expensive and has numerous additional features which you may find useful as well. FREE SALES FORECAST
TRAC allows users to collaborate, override with ease, compare and focus on previous months forecasts all intended to improve forecast accuracy.
Bottom line here is that will introduce a systemised, transferrable, standard way to allow you to focus on the data and analysis.
HEALTH Warning.
Forecasting is not an exact science and not a black box running in the corner. It is a constant iterative process that requires user intervention to counter with.
1) Experience
2) On the ground knowledge
3) Nuance
4) Politics, Noise etc
5) Intuition.