Agroindustrial project analysi

THE MARKETING FACTOR 59* Likely competitive reaction?* Adjustments in marketing strategy?Demand ForecastingDemand forecasts are needed to estimate the economic implicationsof the marketing plan and are used to project profitability,financial and raw material needs, and plant capacity. Although finaldemand projections are dependent on a final marketing plan becauseit sets the parameters of the market segment, the demandforecasts and marketing plans must be developed simultaneously.For example, the expected market size should be estimated earlyand compared with the minimum economical size for the plant orwith the availability of raw material. If market demand does notsupport this production scale or exceeds raw material supply, thestudy need go no further. Similarly, the firm would benefit inselecting elements of the marketing nmix by projecting the effect ofeach at various sales volumes.Forecasting involves collecting and analyzing past data to understandfuture market behavior and to reduce the uncertainty ofdecisionmaking. The analyst should examine the forecasting dataand techniques carefully. A discussion of data requirements andforecasting methods, which can be placed in three main categories-judgmental estimates, time-series analyses, and causal modelsfollows.Data considerationsBefore using data for forecasting, an analyst should consider thekind of data he or she needs-including sources, reliability, andunderlying assumptions.TYPE OF DATA. Forecasts should be made in physical and monetaryvalues, and units of measure should be standardized to facilitatecomparisons. Wholesale, retail, and international (free-onboard[f.o.b.], or cost-insurance-freight [c.i.f.]) price data, however,should not be mixed. Distribution markups represent these pricelevel differences. Manufacturer-level prices are the most relevantfor agroindustrial demand projections.Analysts also must decide what time period the data should encompass.This decision usually depends on how representative the