Survey method is one of the most common and direct methods of forecasting demand in the short term. This method encompasses the future purchase plans of consumers and their intentions. In this method, an organization conducts surveys with consumers to determine the demand for their existing products and services and anticipate the future demand accordingly.
- Experts’ Opinion Poll
Refers to a method in which experts are requested to provide their opinion about the product. Generally, in an organization, sales representatives act as experts who can assess the demand for the product in different areas, regions, or cities.
Sales representatives are in close touch with consumers; therefore, they are well aware of the consumers’ future purchase plans, their reactions to market change, and their perceptions for other competing products. They provide an approximate estimate of the demand for the organization’s products. This method is quite simple and less expensive.
However, it has its own limitations, which are discussed as follows:
(a) Provides estimates that are dependent on the market skills of experts and their experience. These skills differ from individual to individual. In this way, making exact demand forecasts becomes difficult.
(b) Involves subjective judgment of the assessor, which may lead to over or under-estimation.
(c) Depends on data provided by sales representatives who may have inadequate information about the market.
(d) Ignores factors, such as change in Gross National Product, availability of credit, and future prospects of the industry, which may prove helpful in demand forecasting.
- Delphi Method
Refers to a group decision-making technique of forecasting demand. In this method, questions are individually asked from a group of experts to obtain their opinions on demand for products in future. These questions are repeatedly asked until a consensus is obtained.
In addition, in this method, each expert is provided information regarding the estimates made by other experts in the group, so that he/she can revise his/her estimates with respect to others’ estimates. In this way, the forecasts are cross checked among experts to reach more accurate decision making.
Ever expert is allowed to react or provide suggestions on others’ estimates. However, the names of experts are kept anonymous while exchanging estimates among experts to facilitate fair judgment and reduce halo effect.
The main advantage of this method is that it is time and cost effective as a number of experts are approached in a short time without spending on other resources. However, this method may lead to subjective decision making.
- Market Experiment Method
Involves collecting necessary information regarding the current and future demand for a product. This method carries out the studies and experiments on consumer behavior under actual market conditions. In this method, some areas of markets are selected with similar features, such as population, income levels, cultural background, and tastes of consumers.
The market experiments are carried out with the help of changing prices and expenditure, so that the resultant changes in the demand are recorded. These results help in forecasting future demand.
There are various limitations of this method, which are as follows:
(a) Refers to an expensive method; therefore, it may not be affordable by small-scale organizations
(b) Affects the results of experiments due to various social-economic conditions, such as strikes, political instability, natural calamities