Main page and downloading    General   Sales   Materials   Personnel   Profit   Taxes  Money  Results

IBD short description: Demand forecast

Demand prediction concept

The consumer demand is calculated using the following two models:

1. The dynamic model of customers' information about the competing products is used to predict the number of potential customers.

A part of customers may be informed about the selected product due to their use of the product in previous months. From the rest customers a part can get information from publicity actions. This part is defined in Publicity form as a % of the customers informed through publicity. Not informed customers are not considered as potential buyers.

The customers informed through publicity can forget the publicity action after its active period will finish (see Publicity form below). They become satiated customers after buying one of competing products, and stay in this state during the product use time. Then they become ready for a new buying.

The customers representing the selected consumer type are grouped by sub sets of competing products they know. Each group of customers makes its choice within this sub set. The program calculates customer quantity in each group for current time unit. Then the consumer choice model (see below) is applied for each group in the same time unit. Its results (delivery) are used to define the satiated and former customers for the next time units. And so on up to end of the planned period. IBD performs all these operations each time when the Demand form is recalculated automatically or by user command.

2. The consumer choice model is used to predict the demand of the selected consumer type for all competing products during a time unit.

The reasonable consumer behavior is supposed. Each consumer unit (CU, for example, a customer) in a group (see 1) chooses a quantity (may be 0) of each known to him competing product so that:

- total cost of purchased products does not exceed his budget limitation - the acceptable consumption cost;

- these quantities provide maximal difference between the consumer total satisfaction (in cost units) and total consumption cost.

In general case the customer can decide to buy a mix of some products for the same purpose instead of one product, the most appropriate for him. Why this decision may be his optimal choice?

If the partial customer satiation with the product is possible (see Satisfaction form below), the satiation effect is supposed: the more is the customer satiation degree with the product, the less is the satisfaction he finds in each next consumed unit of this product. Therefore the most desired product can become less desired than another product, not consumed yet. The customer chooses also an amount of this product until a third product becomes most attractive one, and so on. So a mix can be chosen for the time unit because of satiation (for example - different fruits or vegetables instead of one).

If only full or no customer satiation with the product is possible (for example, a car), he can only choose between this product and other products.

IBD applies this customer choice model to each customer group (see above), i.e. the program finds the expected amount of each product that will be chosen by one customer (CU) of the group. Since customer quantity in each group is already known (see above), the total demand of the selected consumer type may be calculated for each competing product and all planned time units.

Thereby the program predicts the results of the market competition in time. In addition it shows the effect of: publicity actions, demand factors, price changes and former consumption.

Here the main documents (forms) of demand prediction are presented. In these forms the white fields are intended for data input, the blue ones are calculated or selected by IBD. 

Consumer options - allows selecting for each consumer type the products of your and other firms that are competing when the customers of this type make their choice. The form contains common list of all competing products (defined in the forms Production and Competitors, see General page) and you can select from them the interesting ones for the currently chosen consumer.  

Consumer preference - for each consumer type and each preference factor this form allows inputting the factor comparative values for all competing products of your and other firms.  IBD uses them to calculate the customer comparative preference. 

Consumer satisfaction - contains the comparison of the consumer satisfaction by full satiation of his demand with each competing product, their consumption norms and data allowing to estimate consumer satiation effect (see explanation above).

Publicity - shows different publicity actions foreseen during the planned period for the competing products; the supposed percent of informed customers; the active period and the cost of each action. The publicity actions are considered as any activity increasing or supporting the product fame and sales.  

Demand - for each consumer type and each competitive product this form presents the calculation of potential customers quantity, the expected demand in each time unit (see the concept above) and also your decision about the delivery value to this consumer. If you have marked the option 'Delivery = Demand', the program fulfils this assignment for each planned time unit and takes it into account for the next time units calculation.

Main page and downloading   General   Sales   Materials   Personnel   Profit   Taxes    Money   Results