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I am just starting new research for a distribution proposal.  For a new product.  Sales Forecasts or Projections are really just a guestimate.

I am interested to hear some comments or suggestions on;

How to effectively forecast the sales of a new product!

Thanks

Brian,

Indeed creating reasonable and reliable forecasts is tough, but much of business planning depends on it. Step 1 is you need to size the total market. This should be the size of the total market that you expect to go after. If you have a local business, then just look at the local size; if it is an Internet business then consider Internet households in the US. Keep in mind that you must focus only on those consumers that would have interest in your product. You should be able to get some numbers from industry trade journals, industry reports, magazines, libraries, etc. You may need to do some math to get appropriate numbers as you can`t always find the exact numbers you are looking for.

Now that you have the total market, you need to determine what % of those you can reach. This depends on you marketing spending and methods. This answers the question "Who will even know my product exists?"

Third (if you thought the first 2 steps were soft sciences, wait for this), you need to estimate the % of the reached market that you can capture. This is quite tough and is really just an educated guess. Lots of Internet companies in the 90`s said "if we get just 1% of the market, we`ll be rich!" But sometimes 1% is a very lot. It`s best to have low, medium, and high projections so you can see how it affects your planning. Another approach is to determine how much of the market you need to capture in order to break even, or reach some goal. Then you can determine if that is feasible.

I hope this was somewhat helpful. Best of luck.

Hi Brian,

I have been doing a similar thing in Australia. We used sample products to
test the market, try a few different channels before commiting to the big
spend.

Maybe we should swap IM`s and learn from each other!

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Pay The Price

Thanks for the comments guys!

I always wonder if there are things I may be missing that would give a more accurate picture of the market numbers.  I guess short of hiring a market research firm theres only so much you can do!  It is somewhat subjective, since there are so many variables.  The most important thing would be, being able to justify your numbers to an external entity such as an investor or partner.

 

Brian - not sure if this helps, but another aspect you may want to consider is do some research on you industry and find out what the "Industry" standard is for your product or similar product.

I`ve done that for my startup and I`ve then scaled back my projections to a percentage of that standard for the first few months, then increased it on the "hopes" that marketing and promotions help increase it.

Not sure if this information is readily available, but I did some extensive internet research on it and found associations and industry watch-dog sites that disclosed it.

Then, evealuate it against your break-even and use it as a monitoring tool as you get started. You can then use it to determine if you`re selling enough widgets that month to break-even or not.

HTH


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Shane Cooper http://www.altitudedreamcars.com - Coming together is a beginning. Keeping together is progress. Working together is success!

Thanks for the tip HTH - Coscooper!  I will defintely look into that.  Great info for benchmarking.  That will work for some of my products, as there are other products in the market that are similiar.

The product I am working on right now, is not currently available in this geographic area but been offered in other markets with success.  Perhaps I should attempt to contact vendors in other markets and see if any would be friendly enough to help out with some information on their sales.

Thanks so much for the tips!