| Example of How to Compute Proforma Forecast of Volume |
| Example Product: Google's new wrist watch |
| Step 1 – Determine Total Market Demand |
| Total wrist watch demand per year | = 1,560,000 | units | | Get this information from IBIS World or other Qualified Source such as Industry Chamber, etc. |
| Annual growth in total market demand | = 3% | per year | | Get this information from IBIS World or other Qualified Source |
| Growth Pattern for market Demand | Straight Line | | | Base method on what market analysis reveals - Straight line, Hyperbola, Accellerating, Decellerating, etc. |
| (From Wrist Watch Industry Analysis Group semi-annual forecast dated Jan 10, 2015) | | | | Cite your research sources |
| Step 2 – Determine Your Business’ Impact on Demand |
| Expected diversions to new Google watch design from existing market volume 10% | = 156,000 | units | | Develop percentage based on Market Research findings |
| (Based on experience with similar products, and algorithms of market behavior) |
| Expected market expansion due to innovative features of Google watch design | = 80,000 | units | | Develop expansion scope based on Market Research findings |
| (Based on experience with similar products, and algorithms of market behavior) |
| Total anticipated demand for Google Watch Design (full year basis) | = 236,000 | units |
| Phased launch impact (Market introduction on May 12, 2015) | = 7/12 of annual volume | | | First year effect will be partial year if introduced after January |
| Step 3 - Compute Proforma Forecast Results |
| First Year Forecast (7/12 of full year forecast) | = 137,700 | units | | Anticipated demand X phased launch impact |
| Second Year’s Forecast (+3% of full year forecast) | = 243,100 | units | | Full year anticipated demand X Annual Growth factor |
| Third Year’s Forecast (+3% of second year forecast) | = 250,400 | units | | Second year demand X Annual Growth factor |
| Fourth Year’s Forecast (+3% of third year forecast) | = 257,900 | units | | etc. |
| Fifth Year’s Forecast (+3% of fourth year forecast) | = 265,600 | units |
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EMG4006ExampleofHowtoComputeProformaForecastofVolumeforChapter3-MarketAnalysis.xlsx
