Business Forecasting Topic 10 Flashcards
diffusion
number of people/households/companies
- adopted the innovation (made at least 1 purchase_)
sales
includes diffusion and second purchases and replacement of original purchases
forecasting diffusion and sales
- 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
- normally saturation point for diffusion - sales may have no upper bound
- modelling decisions on purchasing second or replacement items is difficult
customer intentions surveys
- 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
when are customer intentions surveys most reliable ?
5 scenarios
- real purchase decision soon after study
- durable product
- asked to indicate intentions related to specific types of the products
- predict % of consumers who will buy rather than total mkt sales
- forecasts for existing products not new ones
growth curve models
- diffusion of new products follows pattern
cumulate new adopters = number of those who adopted new product up to end of year = S shaped curve
Growth curve
- curve flatten out after years
- approaches market saturation lvl
Point of inflection
point where changes from increasing to decreasing growth
forces determining the shape of growth curves
- more adopt = greater exposure = imitate existing adopters = speed up growth = more adopt
- mkt saturation point is approached = difficult to find new adopters = remaining are those with low propensity to adopt new = slow growth
growth curves are used to obtain 4 things
- medium & LT diffusion forecasting
- saturation lvls estimates
- estimates of when peak diffusion occurs
- estimates of how large peak demand is
3 Growth curve models
- simple logistic (pearl) curve
- Gompertz curve
- bass curve
simple logistic curve
symmetrical about point of inflexion
- slope depends on y and m-y
progress achieved stimulates further growth (imitation) -> inhibited as saturation point is approached
Gompertz curve
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
Bass Curve assumptions
assumes adoption of innovation depends on
- coefficient of innovation (p)
- coefficient of imitation (q)
- total market potential
-analagous products = estimate coefficients
coefficient of innovation
likelihood person will start to use product
because of media/external factors
stable across applications
around 0.03