8 Forecasting8.1 Basic Forecasting Method
Last year's sales can be a good starting point for this year's forecasts. For example, if in the previous year your Traditional product sold 1,100,000 units without stocking out, you can look at the segment's growth rate and say “all things being equal, we can expect to sell 8.2% more units this year than last year.”
1,100,000 * 0.092 = 101,200
Adding 101,200 to last year's sales of 1,100,000 units gives you a starting forecast for the upcoming year of 1,201,200 units.
Each Statistics box on the Segment Analyses pages (pages 5 - 9) of The Capstone® Courier publish last year's demand and the segment growth rate. Multiplying last y ear's demand by the growth rate then adding the result to last year's demand will determine this year's demand.
At the beginning of Round 1, the sale numbers from the previous year (Round 0) are equal for all companies. At the beginning of Round 2, the sale numbers from Round 1 will not be equal due to differences in product positioning, revision dates, prices, etc.
If your product stocked out, calculate what it could have sold by multiplying the segment demand by the potential sales percentage reported on page 10 of the Courier, the Market Share Report. Next, multiply that by the segment growth rate.
Is this number valid? It is highly unlikely that the market in the upcoming year will be identical to the previous year. Prices will adjust, revision projects will complete– the playing field will change. Still, this number can be a good departure point as you assess your product offer and speculate what your competitors will offer.
Keep in mind the possibility that your products sold because competitors who otherwise would have made sales under produced and stocked out. Page 10 of the Courier displays actual and potential sales as a percentage for each product. If your actual far exceeded your potential because your competitors under produced, you cannot count on them making the same mistake again.