In forecasting the demand for a new product, the firm will need to make a market survey of customer need

analysis of sales records of potentially competing products or analysis of the life cycle of existing products which may be substitutes. The sales records of a comparable product may be used as the basis for making an estimate or a prediction of sales of a new product. The life-cycle approach is based on the theory that each product goes through a predictable growth pattern following its initial introduction. Application of this method assumes that a- product experiences an introductory phase, further development, growth, maturity, stabilization in acceptance and then decline. The key to using this method is to find a growth pattern in some established product which services the same market so as to use its record as a guide. In the case of an established product, changes in some key -variables such as customer's income or the level of economic activity may provide the required clues. Here forecasting becomes a matter of predicting possible elasticities or responsiveness to key variable changes. The market survey method of predicting new product demand requires that questioner of ires be sent to potential customers selected by a random or stratified sampling method.