When a company attempts to create a demand forecast, it is essential to follow certain steps. Demand planning is crucial to the overall well-being and health of a brand, especially when it comes to new and emerging categories of products. If your company is beginning to partake in demand planning, make sure to follow these four essential steps.
Create a Core Group
The first step to demand planning is to develop a team of workers who work in relevant departments; these workers will most likely come from your marketing and sales departments as well as a few from the operations and technical departments. The workers should be tasked with overseeing the entire demand planning operation and should be held accountable throughout the launch period to ensure the demand planning process becomes predictable and adequate for the longevity of the company.
Analyze and Choose a Set of Assumptions
By using market research and combining it with market-and-user testing as well as buyer surveys, it becomes possible for the core group to collectively review all pertinent demand planning data; this includes both qualitative and quantitative data. When the core group takes the data to identify and choose a set of assumptions, the launching pad for the entire demand planning process is then established and ready for demand planning purposes.
When choosing a set of assumptions, the core group should include:
- Number of customers in the target market
- A ratio of customers in the target market who are most likely to buy the product now or in the future
- An anticipated timeframe in which the product is most likely to be bought
- Any patterns that highlight repeat purchasing or replacement purchasing tendencies
Develop Granular Models
To ensure a company is producing demand planning and forecasts that actually help the well-being of its brand, the core group must develop forecasting models that are extremely granular. This allows forecasting and demand planning to be carried out according to various segments of the target market, which is essential to setting prices for a product based on the timing and location of the customer purchase. And this is all the more important when dealing with radically new products that push innovation to the next level. Why? Because customers often stay up all night just waiting to be one of the first ones to try out the new product, and when you can meet these stringent demands, it becomes possible to gain a competitive edge that your competitors lack.
Create Responsive Time Periods
Another important step is to create responsive time periods with these time periods taking certain precedence during the first few weeks of a product’s launch. In fact, the first few days and weeks after a product is launched must be meticulously monitored by the core group. This is to ensure the company is properly prepared (regardless of predictions and forecasts) for the future demand of the new product.
These are the first four essential steps of demand planning. Check out the final four essential steps for demand planning in next week’s post.