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Consumer Demand Forecasting  combination of two words  Demand means outside requirements of a product or service.  Forecasting means making an estimation in the present for a future occurring event. Demand Forecasting • It is a technique for estimation of probable demand for a product or services in the future. • It is based on the analysis of past demand for that product or service in the present market condition. • Should be done on a scientific basis and facts and events related to forecasting should be considered. • After gathering information about various aspect of the market and demand based on past, an attempt may be made to estimate future demand. Usefulness of Demand Forecasting  Plays a vital role in decision making of a business.  Most important aspect for a business for achieving its objectives.  Reduces risk related to business activities and helps it to take efficient decisions.  Provides a reasonable data for the organization’s capital investment and expansion decision.  Provides a way for the formulation of suitable pricing and advertisement strategies. Significance of Demand Forecasting • Fulfilling objectives of the business • Preparing the budget • Taking management decision • Evaluating performance The Scope of Demand Forecasting • The scope of demand forecasting depends upon the operated area of the firm, present as well as what is proposed in the future. • The scope should be decided considering time and cost involved in relation to the benefit of the information acquired through the study of demand.

Types of Forecasting 1. Based on Economy • Macro-level forecasting: It deals with the general economic environment relating to the economy as measured by the Index of Industrial Production(IIP), national income and general level of employment etc. • Industry level forecasting: Industry level forecasting deals with the demand for industry’s products as a whole. • Firm-level forecasting: It means forecasting the demand for a particular firm’s product. For example, demand for Birla cement, demand for Raymond clothes etc. 2. Based on Time Period • Short-term forecasting: It covers a short period of time, depending upon nature of the industry.  It is done generally for six months or less than one year.  Short-term forecasting is generally useful in tactical decisions. • Long-term forecasting casting: Long-term forecasts are for a longer period of time say, two to five years or more.  It gives information for major strategic decisions of the firm. Forecasting Techniques Approaches to forecasting • Qualitative Forecasting is based on judgments expressed by individuals or groups. • Quantitative Forecasting utilizes significant amount of data and equations.  Naïve Forecasting - Projects past data into the future w/o explaining future trends.  Causal or Explanatory forecasting - Attempts to explain the functional relationships between the variable to be estimated (the dependent variable) and the variable/s that are responsible for the charges (the independents variable)

Broad Categories of most commonly forecasting techniques 1. Qualitative Analysis 2. Time-Series Analysis 3. Trend Analysis and Projection 4. Exponential Smoothing 5. Econometric Methods

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Qualitative Analysis Expert Opinion or Opinion Poll  Executive Polling or Expert Opinion the firms can poll its top management from its sales, production, finance and personal departments on their views on the sales outlook for the firm during the next quarter or the year.  Sales Force Polling this is a forecast on the firm's sales in each region and for each product line; it is based on the opinion of the firm’s sales force in the field.  Consumer Intentions Polling companies selling durable goods sometimes a poll sample of potential buyers on their purchasing intentions. Survey Techniques  Interviews  Mailed Questionnaires Components of Time-Series 1. Secular Trend refers to a long-run increase or decrease in the data series. 2. Cyclical Variations are the major expansions and contractions in most economic time series that seem to recur every several years. 3. Seasonal Variations refers to regularly fluctuation in economic activity during each year. 4. Irregular or Random Variations are the variations in the data series resulting from wars, natural disasters, strikes or other unique events. Trend analysis and projection trends  Forecasting by trend projection is predicted on the assumptions that historical relationships will continue in the future.

Exponential smoothing  It is an easily learned and easily applied procedure for making some determination based on prior assumptions by the user, such as seasonality. Econometric method  Regression Method - Combines the economic theory with statistical tools of estimation.  Simultaneous Equations Model - Involves the estimation of several simultaneous equations. What Competitive Pricing Techniques? 1. It is all about monitoring the prices of competitors? 2. Competitive Pricing Strategy is not all about price matching and undercutting competitor prices. 3. When a service or product is set reference to what the competition is charging, it is called as a competitive pricing. 4. When establishing the appropriate strategy, it is essential to have a look at the product life cycle. 3 Different Stands 1. Pricing similar products higher than what your competitors do, need that your product has something special to offer. 2. Pricing lower than what your competitors are charging depends on your resources. 3. Pricing similar to what your competitors are offering diminishes the distinguishing factors. Advantage of Pricing Techniques 1. Respond quicker to competition  Gives your business control over the competition 2. Delight customers who are price sensitive  It’s usually one of the key deciding factors for businesses or consumers when making decision 3. Lay the foundation of dynamic pricing  You take first steps of dynamic pricing, a complex approach that stands at the top of competitive pricing strategies 4. Avoid revenues loss from race-to-the-bottom

 Some businesses confuse this strategy where they out their prices to the cheapest but in fact, there are opportunities that are missed if you monitor your competitors right 5. Combine with other strategies  It can be linked with some other pricing strategies to make it even more efficient Disadvantage of Pricing Techniques 1. May get you distracted from other business tasks  If a retailer just focuses on competing with other players in the market, they may miss covering production and overhead costs 2. It doesn’t work in all markets  By setting a competitive pricing intelligence tool, retailer assume that competitors have priced their product correctly. But, the pricing strategy of competitors my not fit with the company’s overall strategy and might cause disharmony 3. Could be difficult for smaller retailers  For micro and small sized companies, creating resources for such technologies, money, new staffs to sustain competitive pricing strategy can be a trouble Pricing Strategies to attract customers. 1. Predatory Pricing 2. Average Cost Pricing 3. Psychological Pricing 4. Price Discrimination 5. Penetration Pricing 6. Premium pricing 7. Premium Pricing Decoy 8. Market-Based Pricing 9. Reference Pricing 10. Markup Pricing 11. Optional Pricing 12. Price Skimming 13. Bundle Pricing

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Limit Pricing Price Matching Dynamic Pricing Retail Price Mechanism

6 Different Pricing Strategies 1. Premium Pricing  Businesses set costs higher than their competitors. 2. Penetration Pricing  Aim to attract buyers by offering lower prices on goods and services 3. Economy Pricing  Aim to attract the most price-conscious of consumers 4. Price Skimming  Designed to help businesses maximize sales on new products and services. 5. Psychological Pricing  Refers to techniques that marketer use to encourage customer to respond on emotional levels rather than logical wants. 6. Bundle Pricing  Small businesses sell multiple products for a lower rate than customers would face if they purchased each item individually 5 Steps to create the right Pricing Techniques 1. Determine your business goals. 2. Conduct a thorough market pricing analysis. 3. Analyze your target audience. 4. Profile your competitive landscape. 5. Create a pricing strategy and execution plan.