Business Forecasting Topic 10 Flashcards

1
Q

diffusion

A

number of people/households/companies
- adopted the innovation (made at least 1 purchase_)

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2
Q

sales

A

includes diffusion and second purchases and replacement of original purchases

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3
Q

forecasting diffusion and sales

A
  • easier to forecast diffusion
  • no past data on demand to fit statistical model
  • rely on judgment to make forecasts
  • have demand histories for analogous products = statistical methods are useful
  1. normally saturation point for diffusion - sales may have no upper bound
  2. modelling decisions on purchasing second or replacement items is difficult
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4
Q

customer intentions surveys

A
  • potential customers
  • assess probability they would purchase product if launched
    0 = deffo not purchase
    100 = certainly purchase

used to estimate total market
reduced by 50% as people overstate

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5
Q

when are customer intentions surveys most reliable ?
5 scenarios

A
  1. real purchase decision soon after study
  2. durable product
  3. asked to indicate intentions related to specific types of the products
  4. predict % of consumers who will buy rather than total mkt sales
  5. forecasts for existing products not new ones
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6
Q

growth curve models

A
  • diffusion of new products follows pattern

cumulate new adopters = number of those who adopted new product up to end of year = S shaped curve

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7
Q

Growth curve

A
  • curve flatten out after years
  • approaches market saturation lvl
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8
Q

Point of inflection

A

point where changes from increasing to decreasing growth

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9
Q

forces determining the shape of growth curves

A
  1. more adopt = greater exposure = imitate existing adopters = speed up growth = more adopt
  2. mkt saturation point is approached = difficult to find new adopters = remaining are those with low propensity to adopt new = slow growth
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10
Q

growth curves are used to obtain 4 things

A
  1. medium & LT diffusion forecasting
  2. saturation lvls estimates
  3. estimates of when peak diffusion occurs
  4. estimates of how large peak demand is
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11
Q

3 Growth curve models

A
  1. simple logistic (pearl) curve
  2. Gompertz curve
  3. bass curve
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12
Q

simple logistic curve

A

symmetrical about point of inflexion

  • slope depends on y and m-y
    progress achieved stimulates further growth (imitation) -> inhibited as saturation point is approached
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13
Q

Gompertz curve

A

not symmetrical about point of inflexion

large lvl of adoption achieved - slope depends on m-y
implies present levels dont stimulate further growth and continued progress becomes increasingly more difficult

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14
Q

Bass Curve assumptions

A

assumes adoption of innovation depends on

  1. coefficient of innovation (p)
  2. coefficient of imitation (q)
  3. total market potential

-analagous products = estimate coefficients

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15
Q

coefficient of innovation

A

likelihood person will start to use product
because of media/external factors

stable across applications
around 0.03

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16
Q

coefficient of imitation

A

likelihood start using
because of ‘word of mouth’ or other influences from those already using product

more variable
around 0.38

17
Q

Bass curve formulae

A
18
Q

2 ways of estimating saturation lvls

A
  1. customer intention surveys (may overstate)
  2. data based estimate of lvls -> better than judgment
19
Q

appropriateness of models

A

good indicator are short term forecasts