6 Reasons Why Demand Forecasting Is Important In International and National Businesses

Demand forecasting is a well researched topic, and the most methods used in today’s businesses are relatively new. Setting out goals on sales promotion in international or national business without having relevant knowledge is like jumping from a mountain without having a parachute in your hands. I often find that the first thing people ask me at a conference is the importance of demand forecasting for their companies. In this article I will point out 10 reasons why you need to consider it for your business.

1) Many businesses nowadays provide services and products to their clients without having a clear figure of their demand. Sometimes what they know about their consignments is the deadline they should meet, but missing a proper demand forecasting plan can lead them to not appropriately react to the changes. When a customer is unable to get the product or they want more than once, it can make them to choose the competitor’s product.

2) Marketing gurus of your company may not perfectly promote your sales in case you do now know how much is necessary to produce. If you company overestimates demand, it has a risk of producing too much which can lead you to loss due to holding unsold items. But if it produces too little, there will be a loss of potential profits and your marketing team can not help you in this case too.

3) With the growing tends of globalization and wide range of items in the market coming with different shapes and sizes it is also important to track the demand for each product. The demand for small audio sets, touch-screen audio sets, Bluetooth-enabled audio sets should be considered separately keeping in mind all customers needs.

4) In business battles, especially in international businesses the future prices and costs are not always stable. Demand forecasting should be tied with all profit margins considering the prices and the costs of your production.

5) Changes in technology have contributed towards globalization. The improvements of technology make our lives much more convenient therefore the rules of the game are changing. There should be forecasting about technological change (TC) and its bear upon demand, costs and prices.

6) Besides these all, demand forecasting should be based upon changes in the external environment. As we know a business doesn’t operate in a vacuum. It has to act and react to what happens outside the factory and office walls, and sometimes outside from national borders. With this in mind I want to close up with the 6th reason why it is fundamental for your company.