New Product Sales Forecasting


Forecasting sales for a new product is an especially hazardous undertaking because no historical data is available. Companies typically employ consumer panels to obtain reactions to the products and to gauge probable purchase behavior. Test market data may also guide forecasts.

Since few products introduce totally new features to the market, forecasters can gain insight by carefully analyzing the sales of competing products that the new entry may displace. The situation method provides the forecaster with an estimate of market size and potential demand.

My Consultancy–Asif J. Mir - Management Consultant–transforms organizations where people have the freedom to be creative, a place that brings out the best in everybody–an open, fair place where people have a sense that what they do matters. For details please visit www.asifjmir.com, and my Lectures.

Foreign Exchange


An international marketer needs to transact financial transfers across nation lines in order to close deals. The financial transfers from one country to another are made through the medium of foreign exchange.

Foreign exchange is the monetary mechanism by which transactions involving two or more currencies take place. Transacting foreign exchange deals presents two problems. First, each country has its own methods and procedures for effecting foreign exchanges—usually developed by its central bank. The transactions themselves take place through the banking system. Thus, both the methods and procedures of the central bank and commercial banking constraints must be thoroughly understood and followed to compete a foreign exchange transaction.

The second problem involves the fluctuation of  the rates of exchange. Fluctuations in exchange rates are based on the supply and demand of different currencies. The rate of exchange between two countries can fluctuate from day to day. This produces a great deal of uncertainty since a business person cannot know the exact value of foreign obligations and claims.

To appreciate fully the complexities of foreign exchange, a few terms must be understood. Their understanding also will provide a historical perspective on the making of payments across national boundaries. The terms are gold standard, gold exchange standard, gold bullion standard, inconvertible currencies, and hard and soft currencies.

My Consultancy–Asif J. Mir - Management Consultant–transforms organizations where people have the freedom to be creative, a place that brings out the best in everybody–an open, fair place where people have a sense that what they do matters. For details please visit www.asifjmir.com, and my Lectures.

Corporate Disclosures


Giving stockholders more and better company information is one of the best ways to safeguard their interests. The theory behind the move for greater disclosure of company information is that a stockholder, as an investor, should be as fully informed as possible to make sound investments. By law, stockholders have a right to know about the affairs of the corporation in which they hold ownership shares. Those who attend annual meetings learn about past performance and future goals through speeches made by corporate officers and documents such as the company’s annual report. Those who do not attend meetings must depend primarily on annual reports issued by the company and the opinions of independent financial analysts.

Historically, management has tended to provide stockholders with minimum information. But companies now disclose more about their affairs, in spite of the complicated nature of some information. Stockholders therefore can learn about sales and earnings, assets, capital expenditures and depreciation by line of business, and details of foreign operations.

Corporations also are required to disclose detailed information about directors, how they are chosen, their compensation, conflicts of interest, and their reasons for resigning in policy disputes with management.

My Consultancy–Asif J. Mir - Management Consultant–transforms organizations where people have the freedom to be creative, a place that brings out the best in everybody–an open, fair place where people have a sense that what they do matters. For details please visit www.asifjmir.com, and my Lectures.

 

Group Decision-Making


The person leading the discussion can have a big effect on whether the group’s decision is useful. If a chairperson monopolizes and continually shoots down others’ ideas while pushing his or her own, it’s likely that other points of view will go unexpressed.

An effective discussion leader has responsibility to do the following:

  1. See that all group members participate. As discussion leader, it is your responsibility to ensure that all group members participate and have an opportunity to express their opinions. Doing so can help ensure that different points of view emerge and that everyone takes ownership of the final decision.
  2. Distinguish between idea getting and idea evaluation. Evaluating and criticizing proposed solutions and ideas actually inhibit the process of getting  or generating new ideas. Yet in most group discussions, one person presents an alternative, and others begin immediately discussing its pros and cons. As a result, group members quickly become apprehensive about suggesting new ideas. Distinguishing between the idea getting and idea evaluation stages—in particular, forbidding criticism of an idea until all ideas have been presented—can be useful here.
  3. Not respond to each participant or dominate the discussion. Remember that the discussion leader’s main responsibility is to elicit ideas from the group, not to supply them. As a discussion leader, you should therefore work hard to facilitate free expression of ideas and avoid dominating the discussion.
  4. See that the effort is directed toward overcoming surmountable obstacles. In other words, focus on solving the problem rather than on discussing historical events that cannot be changed. Some groups make the mistake of becoming embroiled in discussion about who is to blame for the problem or what should have been done to avoid the problem. Such discussions can’t lead to solutions because the past can’t be changed. As a discussion leader, your job is to ensure that the group focuses on obstacles that can be overcome and solutions that can be implemented.

My Consultancy–Asif J. Mir - Management Consultant–transforms organizations where people have the freedom to be creative, a place that brings out the best in everybody–an open, fair place where people have a sense that what they do matters. For details please visit www.asifjmir.com, and my Lectures.

Value Chain Analysis


The term value chain describes a way of looking at a business as a chain of activities that transform inputs into outputs that customers value. Customer value derives from three basic sources: activities that differentiate the product, activities that lower its cost, and activities that meet the customer’s need quickly. Value chain analysis (VAC) attempts to understand how a business creates customer value by examining the contributions of different activities within the business to that value.

VCA takes a process point of view: it divides (sometimes called disaggregates) the business into sets of activities that occur within the business, starting with the inputs a firm receives and finishing with the firm’s products (or services) and after-sales service to customers. VCA attempts to look at its costs across the series of activities the business performs to determine where low-cost advantages or cost disadvantages exist. It looks at the attributes of each of these different activities to determine in what ways each activity that occurs between purchasing inputs and after-sales service helps differentiate the company’s products and services. Proponents of VCA believe it allows managers to better identify their firm’s strengths and weaknesses by looking at the business as a process—a chain of activities—of what actually happens in the business rather than simply looking at it based on arbitrary organizational dividing lines or historical accounting protocol.

Judgment is required across individual firms and different industries because what may be seen as a support activity in one firm or industry may be a primary activity in another. Computer operations might typically be seen as infrastructure support, for example, but may be seen as a primary activity in airlines, newspapers, or banks.

My Consultancy–Asif J. Mir - Management Consultant–transforms organizations where people have the freedom to be creative, a place that brings out the best in everybody–an open, fair place where people have a sense that what they do matters. For details please visit www.asifjmir.com, and my Lectures.

Using Judgmental Forecasts


Judgmental forecasts are based on subjective views – often the options of experts in the field. Suppose a company is about to market an entirely a new product, or the board is looking at plans for 25 years in the future. They won’t have any relevant historical data for a quantative forecast. Sometimes there is a complete absence of data, and at other times the data is unreliable or irrelevant to the future.

 Quantative forecasts are always more reliable, but when you don’t have the necessary data, you have to use a judgmental method. There are five widely used methods:

  • Personal insight. This uses a single person who is familiar with the situation to produce a forecast based on his or her own judgment. This is the most widely used forecasting method – but is unreliable and often gives very bad results.
  • Panel consensus. This collects together a group of experts to make a forecast. If there is no secrecy and the panel talk freely and openly, you can find a genuine consensus. On the other hand, there may be difficulties in combining the views of different people.
  • Market surveys. Sometimes even groups of experts don’t have enough knowledge to give a reasonable forecast about, for example, the launch of a new product. Then market surveys collect data from a sample of potential customers, analyze their views and make inferences about the population at large.
  • Historical analogy. If you are introducing a new product, you might have a similar product that you launched recently, and assume that demand for the new product will follow the same pattern. If a publisher is selling a new book, it can forecast the likely demand from the actual demand for a similar book it published earlier.
  • Delphi method. For this you contact a number of experts by post and give each a questionnaire to complete. Then you analyze the replies from the questionnaires and send summaries back to the experts. You ask them if they would like to reconsider their original replay in the light of summarized replies from others. This is repeated several times – usually between three and six – until the range of options is narrow enough to help with decisions.

 My Consultancy–Asif J. Mir - Management Consultant–transforms organizations where people have the freedom to be creative, a place that brings out the best in everybody–an open, fair place where people have a sense that what they do matters. For details please visit www.asifjmir.com, Line of Sight

Relationship-based Management


The four steps to moving your organization closer to a relationship based management program are:

  1. Segmentation
  2. Analyzing current behavior
  3. Developing strategy to achieve target behaviors
  4. Behavior maintenance.

By behavior I mean the buying or other behaviors of a customer, in relationship to the organization and its products and services.

In beginning the process it is probably worth taking time to do an audit of all the systems, information, research, marketing knowledge, attractiveness, historical results from promotions and any other additional sources of data that may exist in your organization.

Customer relationship management requires a holistic approach so that the infortmation that is held about customers across the organization is drawn together in one central source or at least cross-accessed so that it can be compiled and collated. For example: information is probably held at an accounting level about customer transactions and appended to that may be a payment record. A different computer system may hold results of marketing activity for different customers or different customer groups. Another database may actually hold information on customer service queries or enquiries – times they may have phoned or contacted you for some question or other. This information needs to be carefully scoped and drawn together.

This analysis is the first part of segmentation by behavior and value. The second stage is to begin an initial segmentation of a customer base. You should include the value, potential value and historical behavior of your customer. This should then be compared with the existing buying patterns and behavior and then contrasted, thirdly, with the future, or target behavior, of an ideal or loyal customer.

Every customer is in some way unique. However, many customers are unique in similar ways. There are practical steps that can be taken to segment customers by value, pattern, and buying criteria.

The next stage is to develop a strategy – a plan or a series of plans to attribute the target behavior to each segment or individual – and then to begin to allocate a budget for each of those behaviors. For example, if you had a mail order business marketing collectible antique replicas, you would identify the different customer segments in terms of their buying behaviors and in terms of how much they had spent in the past; the frequency, the types of products that they had been interested in and the mechanisms that they had responded to – whether that’s direct mail or off the page advertising, the internet etc. if you were then trying to increase the frequency of spend or the transaction value of the spend, this would become a target behavior that you would focus on.

The next stage is to look at the actual technology or systems that will allow you to achieve better relationship management with your customers. This may require some redesign or re-implementation of hardware and software to allow access to the information at a single point.

The final stage is management in the evolution of the process. There is always a matter of trial and error and trial and success. Before implementing a wide scale program it is essential that it is carefully tested on a small part of each segment of the customer base before being rolled out. Indeed by using customer relationship management methods in segmenting customers and customer groups more accurately, test marketing and test promotions can actually be far more accurately guaged and measured.

My Consultancy–Asif J. Mir - Management Consultant–transforms organizations where people have the freedom to be creative, a place that brings out the best in everybody–an open, fair place where people have a sense that what they do matters. For details please visit www.asifjmir.com, Line of Sight

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