Question

Discuss the methods of estimating current market demand.

Answer 1

1] Survey of Buyer’s Choice

When the demand needs to be forecasted in the short run, say a year, then the most feasible method is to ask the customers directly that what are they intending to buy in the forthcoming time period.

2] Collective Opinion Method

Under this method, the salesperson of a firm predicts the estimated future sales in their region. The individual estimates are aggregated to calculate the total estimated future sales. These estimates are reviewed in the light of factors like future changes in the selling price, product designs, changes in competition, advertisement campaigns, the purchasing power of the consumers, employment opportunities, population, etc

3] Barometric Method

This method is based on the past demands of the product and tries to project the past into the future. The economic indicators are used to predict the future trends of the business. Based on the future trends, the demand for the product is forecasted. An index of economic indicators is formed.

4] Market Experiment Method

Another one of the methods of demand forecasting is the market experiment method. Under this method, the demand is forecasted by conducting market studies and experiments on consumer behavior under actual but controlled, market conditions. Certain determinants of demand that can be varied are changed and the experiments are done keeping other factors constant.

5] Expert Opinion Method

Usually, the market experts have explicit knowledge about the factors affecting the demand. Their opinion can help in demand forecasting.