Know-How Exchange : Research/Metrics

Like I say, I think the best is when you put up your product for sale, and see how it does sell as part of test marketing.

I do wonder whether the next best thing is questionnaires. The notion being that if you a) identify your target market correctly, b) fully describe your product, c) have sufficient respondents, and d) ask questions that build-in accuracy or likeliness, then the sales figure you estimate will be as likely as you can get -barring test marketing.

The notion here being you are directly talking to the customers and that has an impact on likeliness

Best I can figure it on this issue of likeliness.

Well, just to nudge it on, just to see if I can eek out any futher and final responses:

In a nutshell, I seem to be directed towards techniques bringing various degrees of forcasting accuracy, based on the following:

* Actual sales of my product (test marketing)

* Comparison or anology with the sales record of a similar product

* Direct connection with potential customers via questionnaire with responses

The first two are based on sales figures, the last simply on responses to questions. Maybe there is a qualitive difference here as it effects accuracy.

I don't know if there is any other general way, in addition to the above, that is good on the issue of sales figure accuracy/likeliness.

It's basically, guess work: Estimate sales based on number of sales per day over a 30 day period.

Start with one sale, then got to two, then three, and so on, PER day, and do so for multiples: 1, 2, 3, 4, 5, then 10, 15, 20 and so on. Do this up to 100. Then for 110 sales per day, then 120, and so on.

Then figure out how much you'll make. From this you can figure out how many units per day it will take you to make X in terms of revenue per month and per quarter.

Set 35 percent of GROSS sales aside for taxes and fees, allocate varying percentages to your varying expenses (marketing, essential overheads, and the like), and see what happens.

From these numbers you'll have some idea of what you'll need to do each month to make ends meet, and to make your profit.

There are definitely research techniques that can help you with estimates, but very often the determinant of sales volume is the marketing effort. How will you position the product? How will people find out about it? How much will they pay for it? Where/how will they buy it?

Unless you have thought through the marketing strategy and plan, estimating demand can be an exercise in futility. And if you have a new product, there's no awareness at all, so demand is zero without some marketing effort.

The approach implicit in your question is "If you build it they will come." ("There's a demand out there, and if I satisfy that demand the product will sell itself.") And we all know that is rarely the case.

It seems to me that we are now talking about two things- a) what affects sales volume, and b) what affects sales forecast accuracy. I don't know if first talking to customers about what they need, and later marketing effort lead to a more accurate sales forecast or not.

If doing these two things does lead to a more accurate sales forecas, then that is something I will have learned and not considered in my quest for sales forecast accuracy.

At the moment I've not talked to customers, but think I have a product that might sell. It's a gardening product and it does what other products would do and more. It's sort of a substitute product.

What I feel I need to do, is establish the production level that the segment can absorb. And that would require a sales forecast. And I'm trying to understand what techniques or activities lend accuracy. I think I may have them above.

At the moment I cannot see how talking to customers about their needs increases sales forecast acuracy, not have marketing effort does. Perhaps someone can enlighten me, particularly on the marketing effort. How can that effort up the accuracy of sales forecasts?

Remember this is a start-up situation. You would be doing marketing effort and no product yet produced, because I've not yet got the likely sales volume the market can absorb. I feel I need that first before making any moves to determing and then committing to a level of production.

https://www.youtube.com/watch?v=gpfd4g3YyG8


The above is not for start-ups, not really, but, I think I'm getting closer to what I need to know.

Says I need to change my quest.

One other point: At this point, when I mention sales forecast, it's a forecast of what volume the market can ABSORBE, not what I think I could sell, through any sales reps etc, and marketing efforts.

Hey guys and gals, I've just realised that I'm making a fundamental mistake: The thing that I'm trying to do at my end is establish what makes for an accurate estimation of what the market can absorb. That's a demand issue. But, I've introduced a subject talking about what makes for accurate sales forecasts. Sorry about that, I need to make a post on what makes for an accurate demand forecast.