new product forecasting

© 2021 Kenneth B. Kahn, Ph.D.

New Product Forecasting (NPF)

Kenneth B. Kahn, Ph.D. Dean and Professor of Marketing

Cleveland State University Monte Ahuja College of Business

Cleveland, Ohio [email protected]

© 2021 Kenneth B. Kahn, Ph.D.

Challenges

New Product Forecasting (NPF)

Challenges of New Product Forecasting

Time Forecast Accuracy

Market Uncertainty

and Volatility

Data Availability and Quality

Tools and Technology

Process

© 2021 Kenneth B. Kahn, Ph.D.

Executive Opinion

Sales Force Composite

Delphi Method

Normative

Exploratory

Scenario Analysis

Assumptions-Based Modeling

Decision Trees

Markov Process Model

Subjective Assessment Methods

Company Judgmental

Concept Testing

Product Use Testing

Market Testing

AC Nielsen BASES

Other Market Testing

Customer/Market Research

Simple TS Analyses

Looks-Like Analysis

Diffusion Modeling

Neural Networks

Other Advanced TS Analyses

Time Series

Multiple Regression

Event Modeling

Causal Modeling/Regression

Company Data Quantitative

Forecasting Techniques

Types of New Product Forecasting Techniques

© 2021 Kenneth B. Kahn, Ph.D.

Today’s Agenda

• Select NPF Techniques

• Forecasting Launch

• Managerial Considerations

© 2021 Kenneth B. Kahn, Ph.D.

Scenario Analysis

T o

d a

y F

u tu

re

Dynamic Leap

Extend Seed Trends

Static Leap

© 2021 Kenneth B. Kahn, Ph.D.

Leap Methodology

© 2021 Kenneth B. Kahn, Ph.D.

Assumptions-Based Modeling

Potential Market

Available Market

Qualified Available Market

Target Market

Penetrated Target Market

© 2021 Kenneth B. Kahn, Ph.D.

Population with Medical Condition: 10,000,000

% Diagnosed: 25%

% Receiving Prescription for Brand: 10%

% Fulfilling Prescription: 50%

% Channel Availability: 90%

Penetrated Target Market

= 112,500 patients

Assumptions-Based Modeling: A Patient Model Example

© 2021 Kenneth B. Kahn, Ph.D.

The ATAR Model

Awareness

Trial

Availability

Units Sold as Trial Purchase

(Initial Purchase)

Awareness

Trial

Availability

Repeat

Quantity Purchased

Units Sold as Repeat Purchases

(Subsequent Purchases)

Total Units Sold

© 2021 Kenneth B. Kahn, Ph.D.

Sensitivity Analysis

© 2021 Kenneth B. Kahn, Ph.D.

versus

© 2021 Kenneth B. Kahn, Ph.D.

New Product Forecast Accuracy

Type of New Product Accuracy

Achieved (2002 Study)

Accuracy

Achieved (2018 SAS/VCU Study)

Cost Reduction 72% 68%

Product Improvement 65% 68%

Line Extension 63% 60%

New Use/New Market 54% 58%

New Category Entry 47% 51%

New-to the-World 40% 46%

Average Across Categories 57% 59%

* Self-reported accuracy one year after launch.

© 2021 Kenneth B. Kahn, Ph.D.

Distinguishing New Product Forecasting

Forecasting Existing

Products

New Product

Forecasting

Data History Assumptions

Analytics Statistical Judgmental

Forecast Point Range

Plan Certainties Contingencies

Measurement Accuracy Meaningfulness

© 2021 Kenneth B. Kahn, Ph.D.

❑ Assignment Eight Due April 19 by 6:00p

❑ Read I&NPP Chapter 10

To Do’s