Market Forecast - Definition & Meaning
What is Market Forecast?
First of all, let us understand what forecast is. Forecasting is done by any company to estimate future trends for the market, product, etc. Market forecast is a key component of market analysis which provides with estimated figures based upon some calculation done on the figures of market research. The projections can be for anything; be it a product, a company, an industry, potential demographic, etc. It gives segmentation of customers based on the demographics and helps in developing the product marketing mix accordingly.
For example: -
|
Target market Forecast |
|||||||
|
Potential Customers |
Growth |
2003 |
2004 |
2005 |
2006 |
2007 |
CAGR |
|
High End home-office |
10% |
25000 |
27500 |
30250 |
33275 |
36603 |
10% |
|
Small Business |
5% |
10000 |
10500 |
11025 |
11576 |
12155 |
5% |
|
Others |
6% |
1000 |
1060 |
1124 |
1191 |
1262 |
5.99% |
|
Total |
8.57% |
36000 |
39060 |
42399 |
46042 |
50020 |
8.57% |
The above market forecast statistics show that in 2003 there were 25000 home offices which grew at an annual rate of 10%. There are 10000 small businesses which are growing at an annual rate of 5%. The developers of this product further examined the market and analysed the potential users which further helped in escalating the figures for future years to come. These figures can further be represented in a graphical format to add trend and projection lines. Like for example, the above data can be projected on a bar graph as shown below.
Different methods of market forecasting: -
a) Performing buyers’ intention surveys to understand the perceptions of potential customers.
b) Interaction between sales people & customers on one to one basis.
c) Test marketing – to sell low quantities of product in limited markets to know customer buying behaviour.
d) Industry indicator analysis.
Advantages: -
a) Helps know the market and the industry.
b) Helps know who the customers are.
c) Helps know the customers’ requirement better.
d) Helps in creating the overall marketing plan.
Hence, this concludes the definition of Market Forecast along with its overview.
This article has been researched & authored by the Business Concepts Team. It has been reviewed & published by the MBA Skool Team. The content on MBA Skool has been created for educational & academic purpose only.
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