Developing and launching new products is a fundamental part of business growth, but the process itself can be taxing without a detailed plan in place. Demand forecasting is an essential tool to implement in gathering valuable data and resources to ensure profitability. Below are the key steps to take in curating a successful demand forecast.
Step One - Understand that it can be Risky
It is no secret that demand forecasting is tricky even for existing products, let alone brand new products. Being confident in a new product’s success is a great thing, but it is also important to be realistic. 80% of new products tend to fail, even for established companies. However, this should not stop you, as growth is not possible without risk.
Ultimately, regardless of the uncertainty that comes with preparing to launch a new product, the best course of action has been proved time and time again to be thorough demand forecasting. Taking control of the situation and applying tried and true techniques will give your new product and company the best chance of success.
Step Two - Don’t Do it Alone
Demand forecasting works best when conducted in a collaborative setting. Utilizing key people in marketing research, surveys, and testing will provide you with the data you need to form conclusions about your target market, expected demand, timing, and trend patterns.
From there, you can consult industry experts to tie up any loose ends in the data to make an accurate judgment on how valuable your new product will be to consumers and set up a solid foundation to reap the benefits of demand planning software in the future.
Step Three - Build Forecasting Models and Combine Techniques
Many new products are not always in demand at the same time. From customers that will purchase right away to others that will wait until a product is more refined, it is clear that demand forecasting is needed to adapt to the ebb and flow of consumerism. That is where a forecasting model comes in.
A well-constructed forecasting model compiles the valuable data from step two to reflect the different segments of customers and predict when they might purchase the product and at what price. Additionally, certain industries will also benefit from different modeling techniques to further diversify their data to make more accurate market plans.
Step Four - Continuously Reforecast
Market trends are cyclical in nature and can change at any moment due to a variety of factors. Monitoring customer feedback, competitor products, media mentions, and continuously obtaining evolutionary data will help you adjust accordingly and estimate target market growth moving forward.
Step Five - Always Have a Plan B
Just like you should diversify your demand forecasting models and techniques, you should also have a plan for the worst. Though pulling the plug on a new product can be discouraging, completely exhausting your resources can end up doing more harm than good. Developing a cost-effective contingency plan well before launch will ensure a swift turnaround for the future.
Conclusion
There is no 100% foolproof way to facilitate new product success, nor are there any shortcuts. Therefore, forecasting demand relies on collaboration, qualitative and quantitative research, and having a solid plan. For more information on demand forecasting and the benefits of demand planning software, check out this blog post.
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