Economy forecasting
Chapter 7
FORECASTING
QUESTIONS & ANSWERS
Q7.1
Accurate company sales and profit forecasting requires careful consideration of firm-specific and broader influences. Discuss some of the microeconomic and macroeconomic factors a firm must consider in its own sales and profit forecasting.
Q7.1
ANSWER
The better a company can assess future demand, the better it can plan its resources.
Every corporation is exposed to three types of factors influencing demand: company, competitive and macroeconomic factors. Microeconomic company-related factors include market share trends, changes in strategy and implementation, and changes in brand value. Microeconomic industry-related factors include competitor advertising, competitor product offerings, market share. Macroeconomic factors that must be considered include income, economic growth, interest rates, and shocks.
There are several methods used to assess and forecast demand. None yields demand numbers that are a 100% successful or guaranteed. However, using more than one imperfect method has proven helpful in improving forecast accuracy and confidence. Q7.2
Forecasting the success of new product introductions is notoriously difficult.
Describe some of the macroeconomic and microeconomic factors that a firm might consider in forecasting sales for a new teeth whitening product.
Q7.2
ANSWER
To forecast market demand for any new product introduction, market size research must be combined with product-specific information. A useful approach would combine macroeconomic trend information with data on microeconomic and competitive performance. Customers will only buy a product if they perceive a need and are able to pay for the new good or service. Of course, ability to pay tends to be a strong determinant of demand for big-ticket items, perceived need may be more important for small-ticket items, like teeth whitening products. Advertising capability or brand name reputation is also apt
FORECASTING
QUESTIONS & ANSWERS
Q7.1
Accurate company sales and profit forecasting requires careful consideration of firm-specific and broader influences. Discuss some of the microeconomic and macroeconomic factors a firm must consider in its own sales and profit forecasting.
Q7.1
ANSWER
The better a company can assess future demand, the better it can plan its resources.
Every corporation is exposed to three types of factors influencing demand: company, competitive and macroeconomic factors. Microeconomic company-related factors include market share trends, changes in strategy and implementation, and changes in brand value. Microeconomic industry-related factors include competitor advertising, competitor product offerings, market share. Macroeconomic factors that must be considered include income, economic growth, interest rates, and shocks.
There are several methods used to assess and forecast demand. None yields demand numbers that are a 100% successful or guaranteed. However, using more than one imperfect method has proven helpful in improving forecast accuracy and confidence. Q7.2
Forecasting the success of new product introductions is notoriously difficult.
Describe some of the macroeconomic and microeconomic factors that a firm might consider in forecasting sales for a new teeth whitening product.
Q7.2
ANSWER
To forecast market demand for any new product introduction, market size research must be combined with product-specific information. A useful approach would combine macroeconomic trend information with data on microeconomic and competitive performance. Customers will only buy a product if they perceive a need and are able to pay for the new good or service. Of course, ability to pay tends to be a strong determinant of demand for big-ticket items, perceived need may be more important for small-ticket items, like teeth whitening products. Advertising capability or brand name reputation is also apt