How to develop a market forecast (in general)

1. How to develop a market forecast (in general) • Find the market size and the number of competing products to get an expected average. • Consider whether products will enter or exit the segment. • Check each competitor's production capabilities. • Finally, compare the merits of our product versus the competition.

2. The steps in detail… • Turn to the Capstone Courier, page 9 (the Size Segment). • Multiply "Total Available Unit Sales" by (1 plus growth rate) to discover the demand this year. • Drop to the bottom of the page. Count the number of competing products.

3. more steps in detail… • Adjust your count if you think products will enter or leave the segment. • Make similar count adjustments to reflect very strong or very weak products. • Divide demand by your count. The result is an estimate for the average product's demand.

4. Even more steps in detail… • Turn in the Capstone Courier to page 4 ("Production Analysis“). • Can the competing products make enough units to meet their demand? If not, expect to pick up sales. • Compare your December Customer Survey score with competitors. • Are you above or below average? Adjust your estimate accordingly.

5. Still more steps… • Consider your new decisions and what you think your competitors will do. Adjust your estimate accordingly. • Do you have sufficient capacity to meet your demand? If not, adjust to the limits of your inventory (remember that there is a scoring penalty for having above 120 days of inventory at the end of each round).

6. Unless your competitors are kind to you, it is unlikely that your product will do better than twice average, and extremely unlikely that you can do three times average.

7. Often your product picks up sales from the fringes of other segments. Do not count on these sales. It becomes more difficult to straddle segments with each passing year.

8. Remember where to enter the worst-case and best case estimates that you develop. Don’t get them mixed up!