Similar to sales force approach, this technique ask experts within the company to produce estimates of future sales. These experts may come from marketing, R&D, or top-level management.
Coalescing sales forecasts of experts should lead to better forecasts.
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Teams can produce biased estimates and can be influenced by particular members of the team (i.e., the CEO).
A panel of outside experts would be asked to estimate sales for a particular product or service. The results would be summarized in a report and given to the same panel of experts. They would then be asked to read their forecast. This might go through several iterations.
Best used for entirely new product service categories.
One has to be able to identify and recruit “experts” from outside the organization.
With this technique, one finds a similar product’s or service’s past sales (life cycle) and extrapolates to your product or service. A new start-up has developed an innovative home entertainment product, but nothing like it has been seen in the market. You might examine past sales of CD players to get a sense of what future sales of the new product might be like.
One can acquire a sense of what factors might affect future sales. It is relatively easy and quick to develop.
One can select the wrong past industry to compare, and the future may not unfold in a similar manner.