INDUSTRY SALES

The Build-Up Method

• Building up estimates of market size

• Aggregate total market size & share
• Estimates collected to evaluate and build a forecast
• Develop a sense of reliability
• Information must compare to other countries
The Build-Up Method
Market Number of Number of Potential Sales per Market Potential
Segments Employees Firms Employee ($) ($)

Accounting
20,000 250 $500 $10,000,000
Firms

Law Firms 15,000 200 $400 $6,000,000

• A sample forecast sales of a new computer product

from two market segments.
• The total market potential is $16,000,000.
Forecasting by Analogy

• Lagging and leading country

• Demonstration effect
• Empirical analyses
An Illustration:
TV Penetration
• Careful assessment of the comparability of the ratio
between sales and GNP of 2 countries is very important
that must be taken into account
Yearly increase in household ownership of TV sets,
1946-70
Judgmental Forecasts

• The Jury Technique

• Expert Pooling
• Panel Consensus
• Delphi Method
Time Series
Extrapolation
• Time Series Data “history in numbers”
– Past performance
– Behavior
– Developments
– Statistical analysis
Time Series
Extrapolation
• Primary Requirements for statistical forecasting of
foreign sales:
1. that data are available
2. that past events are relevant for the future
3. that statistics will be a better judge of what
happened
Time Series
Extrapolation
• Extrapolation – refers to the method by which a time
series of data observed over some periods in the past is
extended into the future
THE END…

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