0510

Problem

What features of the business market support the use of qualitative forecasting approaches? What benefits does the business market analyst gain by combining these qualitative approaches with quantitative forecasting methods?

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Step 1/2

The production of goods and services alone depends upon the forecast of demand and sales that could be in the future. There are various approaches that business organizations use for sales forecast. Among those, two primary approaches to forecast sales are named below:

1. Qualitative.

2. Quantitative.

Qualitative techniques:

Qualitative techniques proceed with informed judgment and rating schemes. Personnel such as executives, distributers, and sales persons analyze the market, economy, and customer behavior to estimate sales forecast.

The qualitative technique composes of two essential components to develop a sales forecast. They are named below:

1. Executive judgment

2. Sales force composite

3. Delphi method.

Qualitative approaches acquired certain special characteristics in the business forecasting analysis. Some of the features of business markets which support the use of qualitative forecasting approaches are given below:

Features of business markets that support use of qualitative forecasting approaches:

Executive judgment method:

• Executive judgment method comes into play when historical information is limited or unavailable.

• Executive judgment method involves in sales forecast where the higher officials not prefer to pass sales forecasting responsibility to anyone.

Sales force composite:

• Sales force composite sales forecasting usually takes place where buyer -seller relationships are close.

• When sales forecasting process by experts is expensive.

Delphi method:

• Delphi method serves better when there are specific and accurate estimations about business market.

• This method involves usually in sales forecasting for long-term estimations.

• It suits for new and unique products and services.

Step 2/2

A business market analyst could gain particular benefits by combining these qualitative approaches with quantitative forecasting methods. They are discussed below in detail:

Benefits by combining qualitative approaches with quantitative forecasting methods:

• Composite forecasting model (which includes qualitative and quantitative factors) spots the blemishes in forecasting.

• These combined forecasting results aids in evaluating the accuracy of other forecasting approaches.

• Taking into consideration many varied business aspects, combined forecasts always provides accurate results.

• Combined forecast technique eliminates false estimates and could boost future profits.