generally used where the purpose is to make a short-run forecast of demand. surveys are conducted to collect information about consumers’ intentions and their future purchase-plans.
consumer survey method of demand forecasting involves direct interview of the potential consumers. it may be in the form of :-
- complete enumeration
- sample survey
- end-use method
Complete Enumeration Method
all potential users of the product are contacted and are asked about their future plan of purchasing the product.
dp = d1 + d2 + d3 + ……… + dn
= ∑ di
where d1 + d2 + d3 etc denote demand by the individual households 1,2,3 etc
Limitations of Complete Enumeration Method
it can be used successfully only in case of those products whose consumers are concentrated in a certain region or locality. demand forecast may not be reliable because of :-
- consumers themselves may not know their actual demand. hence may be unable or unwilling to answer.
- if they answer, the answers to hypothetical questions may not be real.
- consumers response may be biased.
- their plans may change with factors out of the questionaire.
Sample Survey Method
only a few potential consumers and users of the product from relevant market through a sampling method are surveyed.
method of survey may be through direct interview or mailed questionaire.
dp = hr ( h.ad )
dp = probable demand forecast
h = census number of households from relevant market
hs = number of households surveyed or sample households
hr = number of households reporting demand for the product
ad (average expected consumption total qty reported to be consumed
by the reporting households) = —————————————
number of households
Salient Features of Sample Survey Methisthod
this method is simpler, less costly, and less time-consuming than the comprehensive survey method. this is generally used to estimate short-term demand from business firms, govt depts. it is widely used to forecast demand.
this also has limitations similar to that of the complete enumerations method.
End Use Method
this method of demand forecasting has considerable amount of both theoretical and practical values.this method of forecasts requires building up a schedule of probable aggregate demand for inputs in future by consuming industries and various sectors. in this method technological, structural and other changes influencing the demand are taken care in very process of estimation.
- identify and list all possible users of the product.
- where there is lack of data, the managers need to have a thorough knowledge of the product and its uses.
- preparation of an exhaustive list of all possible uses.
- a margin or allowance is necessary to provide for possible new applications of the product in future.
- fixing suitable technical ‘norms’ of consumption of the product.
- these norms are generally expressed in physical terms either as per unit of production of the complete product or per capita etc,.
- value based norms should be avoided it might be difficult to specify the type size etc.
- the prepartion of questionaire is of vital importance as the rest of the analysis flows mainly from the information collected.
- for a reliable forecast, it is necessary that the response is total or as high as possible
- is application of the technical norms.
- for this it is necessary to know the desired or targeted levels of output of the individual industries for the reference year and also the likely development in other economic activities.
- aggregate the product-wise or use-wise content of the item.
- the result gives the estimate of the demand for the product as a whole for the terminal year.
- the exclusive advantages
- to get the future demand for an industrial product in considerable detail by types and sizes.
- it is possible to trace and pinpoint at any time in future as to where and why the actual consumption has deviated from the estimated demand.