stay connected with our monthly download
We’ll drop into your inbox no more than once per month with the latest news, features, tutorials and more.
Are You Falling Victim To Forecasting Bias?
Diversifying your product portfolio is key for any business wishing to remain competitive as an industry leader in the 21st century.
With so many options available to them and so many brands vying for their attention, consumers really do have the pick of the crop… so it’s up to businesses to make sure they’re doing all they can to stay visible and one step ahead of the competition, no matter what field they’re in.
One of the best ways to go about achieving this is, of course, through new product launches. You don’t want your customers to grow tired of your offerings and look elsewhere for something exciting, innovative, and fresh, so coming up with new variations on your chosen theme or discovering new markets you can tap into will certainly serve your brand well in the future.
That being said, however, it’s essential that the appropriate research is carried out prior to new product launches to make sure that there’s sufficient interest and demand for said product. Failures can be hard to bounce back from, so doing all you can to maximise your chances of success will help protect your business interests now and later down the line.
Market research is very useful and you should, indeed, be talking to your customers about your current products and anything new you have in the pipeline, but this isn’t the only weapon you have in your arsenal when it comes to product launches.
Data analysis really comes into its own in this regard… so this is something you would perhaps be wise to make big investments in if you do have ideas for new and exciting products.
New product demand forecasting is absolutely essential for any brand looking to embark on a new venture – and it’s likely you’ll trip, stumble and fall without it. Part of the problem is that new products don’t have any historical data you can look back on or, if they do, you’ll find it very limited. This makes it very tricky to make any kind of predictions about potential success.
Instead, you need to collate data from a range of different sources to help inform your decisions, including sales data from similar products you already have, as well as those of your competitors, the potential impact of marketing and advertising, and the possible timing of the launch, taking seasonality into account.
Forecasting Bias
Something that can trip you up and which you really need to be on your guard against is forecast bias. This is either where you over-forecast or under-forecast and there are many factors that can lead to forecasting errors such as these.
Recency bias, for example, is where we’re led astray by recent occurrences that have happened, with our minds being swayed one way or another – rather than making decisions based on what the data is actually saying.
Issues such as these will always arise because people are fundamentally flawed and bias can rear its head entirely unconsciously… which makes it very difficult to identify and take control of.
However, one key benefit of doing business in the 21st century is the fact that we’ve got a huge amount of very sophisticated technology at our disposal these days that can do a lot of the hard work for us.
Where new product forecasting is concerned, PLM systems could prove particularly useful, helping you to avoid the problem of bias altogether.
Using such software will allow you to increase your output efficiency and help you bring new products to market far quicker than before, as well as doing the analytical work on your behalf so you can identify new areas for growth far more easily, as well. If you’d like to find out more, get in touch with the Bombyx PLM team today.