Cundif and Still:- “ According to Cundif and Still sales

forecasting is an estimate of sales during a

specified future period on which estimates is tied to a
proposed marketing plan which assumes a particular
set of uncontrollable and competitive forces.”

According to Philip Kotler:- “ The Company sales forecast is

the expected level of company sales
based on a chosen marketing plan and assumed marketing
environment.”
Features of Demand Forecasting
From the above discussions the following features of
demand forecasting emerge:

1. Demand forecasting is based on past data and

present positions.

2. Demand forecasting may be monetary or physical.

3. Demand forecasting gives basis to future planning.

4. Demand forecasting is made for a certain period.

5. Future sales and profit estimate can be made by

demand forecasting.
Importance of Demand Forecasting
Demand forecasting is important for every producer. He has to
know the present level of demand as also the increase that is
expected to take place in the demand for his product over time.
Demand forecasts are generally useful for the following
categories of decision makers:-

1. Importance for the producers.

2. Importance for policy makers and planners.
3. Importance for estimating financial requirements.
4. Utility for determination of sales target & incentive.
5. Importance for regular supply of labour and raw material is
made possible by demand forecasting.
6. Production planning is possible with the help of demand
forecasting.
7. Use for other groups of the society researchers, social
workers and other who have a futuristic approach.
[A] Qualitative Method:-

Expert Opinion Method:- Under this method the researcher identifies the experts
on the commodity whose demand forecast is being attempted and probes with
them on the likely demand for the product in the forecast period. The word ‘Expert’
is a high powered term but it should be taken to stand for those who possess the
requisite expertise on the subject. A specialised form of panel opinion is the Delphi
method, Instead of going in for direct identification. This method seeks the opinion
of a group of experts through mail about the expected level of demand. The
responses so received are analysed by an independent body. The method thus takes
care of the disadvantage of panel consensus where some powerful individual could
have influenced the consensus.
Survey Method:- According to this method a few consumers are selected
and their views on the probable demand are collected. The sample is
considered to be a true representation of the entire population. The
demand of the sample so ascertained is then magnified to generate the
total demand of all the consumers for that commodity in the forecast
period. The selection of an opinion sample size is crucial to this method,
while a small sample would be easily managed and less costly.
Enumeration Survy Method:- Under this technique either
consumers are divided in several groups on the basis of
income, caste, sex, education or any other variable or they
may be divided according to geographical regions. Through
appropriately selected sample design, sample units are
selected and data are collected either through direct interview
or by mailing questionnaires or filling up schedules.
Sample Survey Method:- Under this method only a few
consumers are selected and their views on the probable
demand are collected. The sample is considered to by a true
representation of the entire population. The demand of the
sample so ascertained is then magnified to generate the total
demand of all consumers for that commodity in the forecast
period.
End Use Survey Method:- Under this method
commodity that is used for the production of some
other finally consumable goods is also known as an
intermediary good. While the demand for goods used
for final consumption can be forecasted using any
other method the end use method focuses on
forecasting the demand for intermediary goods. Such
goods can also be exported or imported besides being
used for domestic production of other goods. For
example milk is a commodity which can be used as an
intermediary good for the production of ICE Cream,
paneer and other dairy products.
[B] Quantitative Methods:-
These method is based on historical Quantitative data. A statistical
concept is applied to this existing data about the demand for a
commodity over the past year in order to generate the predicted
demand in the forecast period. Due to this reason these Quantitative
methods are also known as statistical methods. Following are the
Quantitative methods:-

Trend Projection Method: A firm which has been in existence for some
time will have accumulated considerable data on sales pertaining to
different time periods. Such data when arranged chronologically yield
time series. Time series relating to sales represent the past pattern of
effective demand for a particular product.
Regression Method:- Under this method relationship is
established between Quantity demanded and one or
more independent variables such as income, price of the
related goods, price of the commodity under
consideration, advertisement cost etc. In regression a
Quantitative relationship is established between demand
which is a dependent variable and the independent
variable i.e., determinants of demand.
Simultaneous Equations Method- This method, also called the complete
system approach to forecasting, is the most sophisticated econometric
method of forecasting. Since it involves complicated mathematical and
statistical tools, its detail discussion is beyond the scope of this text. Thus the
simultaneous equations method overcomes the major problem of the
regression method, viz., forecasts for the independent variable.

Graphical Method- Under this method trend is estimated with the help of a
graph. Time & Quantity demanded are taken on both the axis and demand
forecasting is made for future. This method is completely subjective, as in this
method graph is drawn and on the basis of this graph demand forecasting is
made Expansion of this graph is completely imaginary & subjective so it can be
different for different persons.
following sequence in projecting the demand for a product:
1. Specifying the objectives- The person or agency assigned the task of
forecasting the demand must specifiy the purpose for which demand forecasts
are being made.

2. Selection of Appropriate Method-Once the purpose of demand forecasting has

been specified, we must select the methods which will be used for the purpose.

3. Collection of Appropriate Data-The quality and adequacy of data will

determine the quality of our results and their reliability. As far as possible, data
must be collected by experienced persons.

4. Estimation and Interpretation of results- Having collected the relevant data we

have to compile them and obtain results manually or with the help of computers.
These results must be interpreted and their correspondence with the objective
examined.

5. Evaluation of the Forecasts- If the method or model used in demand

forecasting has objectivity; we may expect to receive good results. Yet the result so
obtained must be verified by persons having professional acumen and expertise.