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Demand Forecasting
Few businesses really understand what drives their markets, their industries, or their brands. Without this understanding, it’s almost impossible to
predict the future, explain the past, or develop the best plan for the future. Typically, Decision Analyst approaches demand forecasting at the industry level
first and recommends including as much historical data as possible (up to 50 years or more, if available). What are the fundamental drivers of the growth
of an industry? For example, the rise in the percentage of women formally employed in the workforce has been one of the main drivers of growth in the restaurant
industry over the past 40 years, but that variable is approaching a limit—so future growth in the restaurant industry might slow. As another example, one
of the major factors in the rapid growth of world population over the past 100 years has been the increasing supply and falling real cost of food. But food
is an energy intensive industry, and the real costs of food are highly likely to rise over the next 50 years, which probably will constrain world population
growth (along with other limits).
In developing a demand forecast for an industry, Decision Analyst creates an
analytical database consisting of some measures of industry growth over the
past 20 years, 30 years, 40 years or longer (revenue in constant dollars, employment,
or unit output, etc.). This is the dependent variable, the thing we are trying
to predict. Then relevant economic data from the same time periods are assembled
and integrated into the database. The economic data are usually expressed in
constant dollars and represent all of the independent variables—the things
that might explain or predict the dependent variable, industry growth (or decline).
Generally, multiple regression and time-series analyses are the workhorses of
demand forecasting and analysis, but other statistical methods are also used
by Decision Analyst, such as input-output analyses.
The great value of demand forecasting is an enhanced ability for a company
to see into and understand the future, and to make optimal decisions to guide
its own destiny.
Why Decision Analyst?
Decision Analyst, as a leading global marketing research and analytical consulting
firm, has the experience and expertise to conduct sophisticated demand forecasting
analyses for businesses, governments, universities, and nonprofit organizations.
If you would like more information or would like to discuss a possible project,
please contact Jerry W. Thomas, President/CEO (jthomas@decisionanalyst.com),
or John Colias, Ph.D., Senior Vice President Advanced Analytics
(jcolias@decisionanalyst.com),
or call 1-800-ANALYSIS (262-5974) or 1-817-640-6166.
Additional Resources From Decision Analyst
Economic Analysis Services
Advanced Analytics Brochures
Forecasting Case Histories
Economic Analysis White Papers
