Factors Affecting Demand Forecasting
Posted by Ripon Abu Hasnat on Tuesday, November 18, 2014 | 0 comments
For making a good forecast, it is essential to
consider the various factors governing demand forecasting. These factors are
summarized as follows.
1. Prevailing business
conditions:
While preparing demand forecast it becomes necessary to study the general economic
conditions very carefully. These include the price level changes, change in
national income, per-capita income, consumption pattern, savings and investment habits,
employment etc.
2. Conditions within the
industry: Every
business enterprise is only a unit of a particular industry. Sales of that
business enterprise are only a part of the total sales of that industry.
Therefore, while preparing demand forecasts for a particular business enterprise,
it becomes necessary to study the changes in the demand of the whole industry, number
of units within the industry, design and quality of product, price policy, competition
within the industry etc.
3. Conditions within the
firm: Internal factors of the
firm also affect the demand forecast. These factors include plant capacity of
the firm, quality of the product, price of the product, advertising and
distribution policies, production policies, financial policies etc.
4. Factors affecting export
trade:
If a firm is engaged in export trade also it should consider the factors
affecting the export trade. These factors include import and export control,
terms and conditions of export, exim policy, export conditions, export finance
etc.
5. Market behavior : While preparing demand
forecast, it is required to consider the market behavior which brings about
changes in demand.
6. Sociological conditions: Sociological factors have
their own impact on demand forecast of the company. These conditions relate to
size of population, density, change in age groups, size of family, family life
cycle, level of education, family income, social awareness etc.
7. Psychological
conditions: While estimating the demand for the product, it becomes necessary
to take into consideration such factors as changes in consumer tastes, habits, fashions,
likes and dislikes, attitudes, perception, life styles, cultural and religious
bents etc.
8. Competitive conditions: The competitive conditions
within the industry may change.
Competitors may enter into market or go out of
market. A demand forecast prepared without considering the activities of
competitors may not be correct.
You can subscribe by e-mail to receive news updates and breaking stories.
0 comments for "Factors Affecting Demand Forecasting"
Leave a reply