“Our job is to figure out what they’re going to want before they do.”– Steve Jobs
When it comes to customer demand, Steve Jobs famously said, “Our job is to figure out what they’re going to want before they do.” Jobs’ position is that Apple needed to “read things that are not yet on the page”.
Demand forecasters attempt to do just that by using predictive analysis techniques to come up with predictions of what customers will want in the future. But generating predictions is only the beginning. Demand forecasting success also includes making informed decisions about product direction, pricing, company expansion, hiring and more — and that people interpreting results don’t fall into the trap of simply fulfilling ones KPI without understanding the impact it has on an entire organization..
What Is Demand Forecasting?
Demand forecasting is the process of predicting how much customers will want your current products or services, figuring out what changes you need to make, and figuring out what new products or services will get people interested. Sure, it’s not easy to guess what people will want, in what amounts, and when. For example, timelines can be very specific: “Should we ship more chips on Friday than on Thursday?” Or, they can cover a certain amount of time, like “between now and a month from now” or “during the next 12 months.”
If the forecast is for a specific product sold by one company, as is often the case, the demand forecast has the same practical effect as a sales forecast for that product. Demand forecasters use a number of different methods to make their predictions. The best method depends on the situation or scope, which we’ll talk about. We’ll also talk about the core ideas that lead to success.
Demand Forecasting Explained
Demand forecasting is a complex topic viewed differently by practitioners. Some see it as using past and current sales to estimate future customer demand, but this ignores forecasting for new products. Economic forecasters assume it’s only about aggregate consumer demand, ignoring business concerns. Regardless of context, demand forecasting predicts what people want, how much and when. This article will refer to a demand forecaster as a business or team serving customers and growing the company, without assumptions about available data or focus level.
What Is Demand Forecasting?
