Market Research forecasting is the process of arriving at an expected future market value through a combination of qualitative and quantitative inputs. Knowing the future by predicting the same helps businesses attune their budgets, resources and efforts to derive the best outcomes, and this in turn help in achieving the organization’s goals. That said, forecasting may not be as easy as it sounds. It requires in-depth knowledge of the industry, extensive knowledge of the financial metrics involved and a profound understanding of the economic shifts that could lead market fluctuations. It is absolutely important for analysts to keep all these factors in mind while forecasting and moreover, employ the accurate forecasting model.
Forecasting administers selection. Forecasting helps organizations to predict the market size during the forecast period. Market forecasting help organizations to plan and allocate or redistribute their budgets and resources to make the most out of the business
Let’s discuss a few points to get forecasting right.
Source: Global Market Database
- Market Dynamics: It is imperative to understand the key dynamics that would affect the market. These could be the overall market trends, drivers, restraints and challenge of a market or it could also be the outcome of tools like PESTLE or Porter’s Five Forces.
- Historic Data: As the term suggests, forecasting is meant to predict the future. However, analysts should also be mindful of including yesteryears in their forecasts, in order to be heedful of the peaks and valleys the market may have experienced. This helps in adjusting all the parameters such as growth rate and plausible expectations required to ensure successful forecasting.
- Current Competitive Analysis: It is always a great idea to keep a close watch on the supplier’s raw material market trajectory, as this directly impacts procurement and influences the overall market size. The technology developments and the flexibility of the supplier to adapt to change in technology is also an important consideration.
- New entrants and substitutes will influence market forces going forward: The new technology or new product introducers are market leaders for a specific duration of time. However, over time if the company failed to adapt with shifting consumer requirements, the risk of it not able to cope up to competition is high.
Forecasting is complex. If not done right, it could have serious implications on an organization’s performance in the long run. So why invest so much of time and effort into it, when all the forecasting data you need is just a click away?
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