Question

1. What are the various qualitative forecasting methods as discussed in Chapter-3, describe them in detail. Can you identify some other qualitative forecasting methods in addition to what is mentioned in the textbook?
2. How is service design different from design of physical products? What are the phases of a service design process? What characteristics make it a well-designed service system? What challenges do you see in designing services?

Answer 1

ANS.

Using qualitative approach, a company forecasts based on judgment and opinion. Grouped under this approach are:

• Executive opinions
• Delphi technique
• Sales force polling
• Consumer surveys

The qualitative (or judgmental) approach can be useful in formulating short-term forecasts and can also supplement the projections based on the use of any of the quantitative methods.

Four of the better-known qualitative forecasting methods are executive opinions, the Delphi method, sales-force polling, and consumer surveys:

1. Executive Opinions

The subjective views of executives or experts from sales, production, finance, purchasing, and administration are averaged to generate a forecast about future sales. Usually this method is used in conjunction with some quantitative method, such as trend extrapolation. The management team modifies the resulting forecast, based on their expectations.

• The advantage of this approach: The forecasting is done quickly and easily, without need of elaborate statistics. Also, the jury of executive opinions may be the only means of forecasting feasible in the absence of adequate data.
• The disadvantage: This, however, is that of group-think. This is a set of problems inherent to those who meet as a group. Foremost among these are high cohesiveness, strong leadership, and insulation of the group. With high cohesiveness, the group becomes increasingly conforming through group pressure that helps stifle dissension and critical thought. Strong leadership fosters group pressure for unanimous opinion. Insulation of the group tends to separate the group from outside opinions, if given.

2. Delphi Method

This is a group technique in which a panel of experts is questioned individually about their perceptions of future events. The experts do not meet as a group, in order to reduce the possibility that consensus is reached because of dominant personality factors. Instead, the forecasts and accompanying arguments are summarized by an outside party and returned to the experts along with further questions. This continues until a consensus is reached.

• Advantages: This type of method is useful and quite effective for long-range forecasting. The technique is done by questionnaire format and eliminates the disadvantages of group think. There is no committee or debate. The experts are not influenced by peer pressure to forecast a certain way, as the answer is not intended to be reached by consensus or unanimity.
• Disadvantages: Low reliability is cited as the main disadvantage of the Delphi method, as well as lack of consensus from the returns.

3. Sales Force Polling

Some companies use as a forecast source salespeople who have continual contacts with customers. They believe that the salespeople who are closest to the ultimate customers may have significant insights regarding the state of the future market. Forecasts based on sales force polling may be averaged to develop a future forecast. Or they may be used to modify other quantitative and/or qualitative forecasts that have been generated internally in the company.

The advantages of this forecast are:

• It is simple to use and understand.
• It uses the specialized knowledge of those closest to the action.
• It can place responsibility for attaining the forecast in the hands of those who most affect the actual results.
• The information can be broken down easily by territory, product, customer, or salesperson.

The disadvantages include: salespeople’s being overly optimistic or pessimistic regarding their predictions and inaccuracies due to broader economic events that are largely beyond their control.

4. Consumer Surveys

Some companies conduct their own market surveys regarding specific consumer purchases. Surveys may consist of telephone contacts, personal interviews, or questionnaires as a means of obtaining data. Extensive statistical analysis usually is applied to survey results in order to test hypotheses regarding consumer behavior.

ANS. 2. A product is tangible. That’s to say, that a customer can buy the product and then hold or store it somewhere (be this in the “real world” or on a computer or device). Most often, its value is generated and derived from the product by the user. The user already knows what they want from the product, hence they buy it.

On the other hand, a service is something that someone experiences and isn’t necessarily owned. For example, health care services or streaming platforms such as Netflix, Spotify and Audible. In each of these cases, the service is not tangible and only has value when it is performed for the user.

With this in mind, it’s true to say that whilst services are by definition people-centred, products aren’t.As you can imagine, the differences in these definitions means that there are also contrasts in the processes of designing products and of designing services.

Product design is the process of identifying a market opportunity, clearly defining the problem, developing a proper solution for that problem and validating the solution with real users.”

As such, design thinking is a brilliant foundation for the product design process, since it is so focused on finding actionable and practical solutions to the problems of users.Understanding the Design Thinking framework, this then feeds into the product development process. Each project will look slightly different, but here’s how the general flow looks:

1. Defining the product vision
2. Product research
3. User analysis
4. Ideation
5. Design
6. Testing and validation
7. Post-launch activities

According to The Service Design Network, it is “The activity of planning and organising people, infrastructure, communication and material components of a service in order to improve its quality and the interaction between service provider and customers.

The purpose of service design methodologies is to design according to the needs of customers or participants, so that the service is user-friendly, competitive and relevant to the customers.”In terms of implementing service design ,the methodology has five basic principles:

1. User-centred, through understanding the user by doing qualitative research
2. Co-creative, by involving all relevant stakeholders in the design process
3. Sequencing, by partitioning a complex service into separate processes
4. Evidencing, by visualising service experiences and making them tangible
5. Holistic, by considering touch-points in a network of interactions and users