Answer to Question #194053 in Microeconomics for Suvidha Verma

Question

Demand forecasting is not a speculative exercise into the unknown. It is essentially a reasonable judgement of future probabilities of the market events based on scientific background. Explain the statement by elaborating different qualitative and quantitative methods of demand forecasting.

Answer 1

Market forecasting is the method of estimating potential demand for a product or service for an organization using historical sales data to create an estimate of anticipated consumer demand.

Forecasting techniques are divided into two categories: qualitative and quantitative.

To make a forecast, qualitative techniques apply knowledge of the industry, market, product, and consumer. The Delphi Method, Market Research, Panel Consensus, and other techniques are largely focused on opinion.There are two types of quantitative methods: time-series methods and explanatory methods.

Time-series approaches allow predictions based solely on the data's historical trends.

Explanatory approaches aim to clarify patterns and forecast future business instructions based on available data.