 So, there are two methods of demand forecasting, one that is subjective methods of demand forecasting and second there is a quantitative methods of demand forecasting. The subjective methods of demand forecasting also known as the qualitative methods of demand forecasting and this basically deals with two question, what do people say and what do they do. So, this qualitative method of demand forecasting generally depends on two question or deals with two question, what do people say and what do they do and this is generally the subjective methods of or the qualitative method of demand forecasting is useful in forecasting the new product, new market for which there is no past data available or no information available. Under this subjective method of demand forecasting the first method is consumers opinion survey. Now what is this consumer opinion survey as the name suggest buyers are ask about their future buying intention of products, their brand preferences and the quantity of purchase. So, generally here a survey is conducted and the survey is conducted among the buyers or the among the potential buyers. Now what is the question being asked to them, whether they are going to buy this product in the future or you can say that what is their buying intention of this product in the future. If they are buying this product which brand they will prefer and what is the quantity they are going to purchase. So, the first question is whether they are going to buy this product, second if they are buying this product what brand they are going to buy and second if they are after identifying the brand what is the amount they are going to buy. And also additional apart from these three question buyers are also asked about some additional information like if the price of this typical brand is going to increase are you still going to buy the product or you are shift your buying to some other product or are you going to still buy the same quantity or you are going to buy a different quantity. So, the possible response to increase in the price with respect to quantity with respect to the brand probable change in the product feature like here the question comes as you like the product or you want any feature to get change with this product. So, and or the other question can be if the company is changing the future of the product are you still buying this product or you are shifting it to a other brand or you are changing your quantity if the product feature is getting change. And what is their response with respect to the competitive product whether you feel any product is better this then this product what you like about that product. So, in this case of consumer opinion survey the first question is being asked first three question is what is the whether they are going to buy this if they are going to buy this which brand they will buy and what is the quantity they are buying. And apart from that also there is some additional information they ask in the consumer opinion survey about the possible response to increase in the price probable change in the product features and also the competitive product. So, this consumer opinion survey is done in two methods typically the survey is done in two methods one is census method another is the sample method. As the name suggest in case of census method the entire population is being considered. So, if you feel that the consumer group is 100 people here the information will be collected the survey will be conducted with all these 100 people. But in case of sample method a representative sample of this 100 people will be taken the entire 100 people will not be taken entire 100 consumer will not be survey rather out of this may be 20 percent 25 percent of the people from this representative sample will be chosen and they will be taking on the survey will be taken on them and on that basis the estimation will be done. So, census method is one where the entire consumer group is taken into the survey and sample method is one where the representative sample of the entire consumer group will be taken for the survey. So, consumer opinion survey used if it is a small group generally they use the census method, but which is time consuming on also costly otherwise they take a sample method which generally deals with the representative sample. And here the challenge is to identifying the representative the proper representative sample will give the insight about the entire consumer group. Statified sampling is being followed if there is some detail information required about the product otherwise this census method and the sample method is generally used in case of the consumer opinion survey. Now, what is the merits of this consumer opinion survey? It is simple to administer just prepare the questionnaire based on that whatever the information required on that basis the question can be framed and you have to go meet the consumer to know the answers or the know the response. It gives realistic results because you are meeting the person who is actually buying the going to buy the product and generally suitable for the short term decisions. Then what may be the demerits here in case of the consumer opinion survey? If you are going to follow the census method generally it is costly time consuming and when it comes to the consumer opinion survey one more demerits also the way they are responding to your question at that time period and when they are buying there may be the change in their thought there may be the change in the way they are buying it or they are buying behavior and in that case the consumer opinion survey will not help in the forecasting the demand. If the behavior has to be same during responding the question and also when they are actually buying it then only it will be helpful for demand forecasting otherwise it will not be helpful. Then we will talk about the other method of subjective method of demand forecasting that is generally the sales force composite and what is sales force composite? Here the sales person are asked about their estimated sales target in the respective sales territory in a given period of time and some total of such estimate form the basis of the forecasted demand. So here it is the next level rather than the consumer here rather than going to each consumer in this method generally the sales person will be asked that what is their sales target because when the sales person is identifying their sales target that is on the basis of the consumer demand. So if you take the sales target that is nothing but the consumer demand in the specific time period in a specific region. So the sales person are asked to about their estimated sales target in the their respective sales territory in a given period of time and that will be taken together to estimate the form of the basis of the forecasted demand. So here suppose there are 10 sales person they will ask what is your estimate of sales target in this year for the given period of time in this particular year in this particular segment. If that give this that is the total consumer demand and we can say that this is the forecasted demand but what are the again challenges over here may be it is easy because we are not targeting each and every consumer who is using or by going to buy this product rather we are we are targeting the sales person who sales person itself represent may be the 1000 consumer or 2000 consumer and they gives a better picture when it comes to that what will be the consumer demand. So it is simple to administer because you are not going to 1 to 1 it is also cost effective because the number gets reduced. So the survey when the survey is being done it is the number comes down and the cost effective and it gives more level figure because since the person who is getting interview is the salesman and salesman they have more information about the buying behavior how the consumer when they are responding to something whether this is actually this is their buying behavior whether there is a biasness or what and what are the demerits of the sales force composite because since this is the one person who is representing the entire consumer group whether it is 1000 consumer or 100 consumer or the group of consumer if the sales person is biased the entire consumer group is biased and in that way that will be not the true representation of the consumer demand and that is why the demand forecast is not going to proper. So if the sales person is optimistic the consumer demand will be optimistic but it may not happen when it goes to the individual consumer is not optimistic. So as you whole if the sales person is optimistic we need to assume that there are 1000 consumer all of them they are optimistic and similarly if the sales person is pessimistic we have to assume that the entire 100 100 consumer group or 1000 consumer group they are also pessimistic and in that way the estimate of the consumer demand changes and demand forecast changes. So if it is optimistic generally we will lead into a situation of high forecast and if it is pessimistic we lead to a situation of a low forecast this is not suitable for the long term and also this is not suitable for the when you do the aggregate for all the region because sales person is in term of that typical territory. So taking their estimates we need to understand this may not be the total consumer demand. So the careful identification of the sales person representing all the territory that will only give the true picture of the consumer demand or the forecaster demand otherwise it may be the regional based demand it cannot be the macro sense it cannot be the demand for across all this territory. Then there is one more method known as the export opinion method and what is export opinion method? Here generally the export is being chosen they are called they have called for the group discussion and in the group discussion either it is by the brainstorming session or for a structure discussion and through that their opinion will be being asked for specific whatever the objective whether it is about the demand forecasting or about the segmentation identification of the new segmentation identification of the new market demand for the existing product or may be the demand for new product whatever the objective on that basis the group discussion will be moderated and the group discussion either will be in the form of the brainstorming session or in the form of the structure discussion. This export opinion method is developed by Osborn in 1953 and it has actually if you look at it has two techniques this export opinion method one is group discussion where the export meets they do the brainstorming session or the discussion and their opinion will be taken to forecast the demand and second is the Delphi technique and Delphi technique is developed by RAND Corporation and here this RAND Corporation they developed this technique post Cold War to forecast the impact of technology on the warfare and here Delphi technique how it is different from the group discussion getting opinion of export without face to face interaction. Basically the export will be chosen and they will be it is not that they have to meet in a group individually they can give their opinion not on the basis of the face to face interaction or on the basis of their opinion the demand will be forecasted. So, in case of extra export opinion methods again it is subdivided into two methods one is group discussion where the export meets do a brainstorming session and give their opinion on that basis of opinion the demand forecasting is done and second is the Delphi technique and in case of Delphi technique the opinion is getting the opinion is received not through the face to face interaction and once we once they get the export opinion on the basis of the export opinion they do the estimate of the demand forecasting. What is the merits of this export opinion method? The experience of the expert generally helps in the getting the realistic figure and there is always a there is always this whatever the requirement of the time and resource that is not valid here because when you do a survey you need time or also you need resources, but in case of this this is just a matter of one day when you do the group discussion you call the expert and you have a session or if it is just the export opinion you go meet the person get the opinion and come back. So, in this case the time and resources is not required and also the experience of expert helps in getting a more realistic figure. What is the demerits? Here the challenge is again to identify the rational or the maybe the proper export to understand the objective of the firm or the objective of the typical producer why they are doing the demand forecasting. If the export is biased then the entire demand forecasting goes for a toss because the entire demand forecasting will be biased and the second demerits over here is that there is a risk of loss of the confidential information to the rival firms because if it is going to the export you are sharing some information and if you are sharing some information and beauty in the public domain the possibility is that there is loss of confidential information of this typical firm to the rivals which is not supposed to be in the public domain and which is not supposed to be revealed. Then the other kind of subjective method of demand forecasting is market simulation and in case of market simulation it is like laboratory testing of the consumer behavior here the artificial market will be developed and people artificial market will be developed and there will be simulation on the basis of the how the buyers they are going to behave or they have to record the consumer behavior during a specific time period they will be given the money to do the buying do the purchases and on that basis they will do the records the buying behavior and they try to make it a artificial market. So, this typical simulation is developed by Graber Granger in a test as 1960 and this is a popular technique of the market simulation and here if you look at how it works generally the artificial market is created and the buyers will do their purchases and on the basis of when they are doing the purchases they are buying behavior their consumer behavior will be recorded and that will help in the market simulation. What is the merit? The merit says that this is the first kind of method where the consumer behavior is being captured in the situation where they are doing the buying and generally it helps in helps in doing a forecasting for the absolutely new product because consumer get acquainted with this and when they see the product on that basis the buying behavior changes and that is a good way to do the demand forecasting. Demerits there is a requirement of the considerable amount of time and money and it may happen that the way when the artificial market the way they are behaving they are not behaving in the same way when they are going to the real world scenario or the real market scenario. So, the possibility is that the buyers behave differently and in that case the entire demand forecasting is on a different direction not in the proper direction. Either it is go on a high direction or it is go in the low direction. Then there is a subjective method of demand forecasting that is test marketing. This is one step ahead of the market simulation and here actually the rather than creating a artificial market it is in the real market generally the buyers do the purchases without and their behavior gets recorded and here the purchase behavior and here the buyer does not know that their behavior is getting recorded. So, this is step ahead of the market simulation where we took the case of the artificial market, but here it is not the artificial market rather it is the real market. Product is actually sold in the certain segment of the market which is known as the test market and where the consumer do the purchases consumers buy without knowing that they are being observed. So, in this case typically in the test marketing the test market is developed consumer they do the purchases and their consumer behavior or the buying behavior is recorded and when they are doing the purchases they are not aware of the fact that they are being observed or they are being recorded. So, this is a real market and this is generally called as the test marketing and this is more reliable among the qualitative methods because it is a kind of real world scenario the buyers they are doing the purchases and also they have no information that their purchase behavior is going to get studied or their purchase behavior is going to get observed and that is why this is more reliable among the qualitative methods and suitable for generally a new product and there is less amount of risk because the buyers is the behavior of the buyers is actually in the market not in the artificial market. It is costly so if when they are launching a new product they are doing a test marketing the entire procedure is very costly and if the product is not doing well the failure of the product generally leads to the sunk cost. So, it is very expensive and they have to plan carefully if they are doing a test marketing at least some level of R and D is required to know that whether the product is going to have some potential in the market or not because otherwise planning a product producing a product doing a test marketing and if it goes in the negative direction the failure of this product leads to the sunk. It is time consuming and when we do the test marketing we do it in a particular location the purchase behavior is also recorded in the observe in a particular location. So, there may be a regional differences which cannot be generalized into the entire market because the behavior of the consumer in one segment of the market may be different from the another region of the market. So, this cannot be generalized. So, we will continue our discussion on this demand forecasting typically on the quantitative methods of demand forecasting in the next session.