23/01/2008 @V.E.S.

MANAGERIAL ECONOMICS-I

TOPIC:- DEMAND FORCASTING

PRODUCT:- NOKIA

Names Roll no.

Asha Ahuja 02
Jigyasa Dhingra 10
Renu Gurdasani 13
Nikhil Mahajan 28
Manali Gawand 67

SUBJECT INCHARGE: Prof. Rajkumar

23/01/2008 @V.E.S.

INDEX

 INTRODUCTION OF DEMAND FORECASTING

 FORECASTING BENEFITS

 METHODS OF DEMAND FORECASTING

 PRODUCT ANALYSING (SURVEY)

 SWOT
23/01/2008 @V.E.S.

Demand Forecasting

The concept of matching supply with demand is straightforward. Just strike

the right balance between what your customers want and the inventory
investment required to meet that demand.
Of course, it's not that easy. Buying too much wastes time, money and space
—and exposes you to potential losses from liquidating overstocks.
Underestimating demand leads to backorders, cancellations and unsatisfied
customers who turn to your competitors.
Manhattan Associates' Demand Forecasting manages the balancing act
between minimizing inventory investment and optimizing revenue
opportunities. It provides a sophisticated, yet easy to use solution to the
forecasting challenges that overwhelm many companies. Consider the
complications the forecaster faces in anticipating demand, accurately and
efficiently:

 Seemingly infinite combinations of locations, products and

forecasting models

 The differing time horizons and forecasting methods for assortment

planning, financial planning and replenishment planning

 The cleansing of historical demand

 Seasonal profiling

 Forecast exceptions
Demand Forecasting overcomes these challenges by providing a single
source for statistical demand forecasting throughout the enterprise. Demand
Forecasting does the heavy statistical lifting to provide the best trended,
seasonally adjusted forecast possible. This frees planners and buyers to
concentrate their time on the fine points of merchandise planning and
inventory optimization to make profit for the company. And use it to
generate and maintain appropriate forecasts at different levels of product and
location. Demand Forecasting is synchronized with Financial Planning, Item
Planning, Assortment Planning and Inventory Optimization.
23/01/2008 @V.E.S.

The better a company can assess future demand, the better it can plan its
resources. Each company is exposed to three types of factors influencing
demand: company, competitive and macroeconomic factors.
Company factors include market share trends, changes in strategy and
implementation, changes in brand value. Competitive factors include
competitor advertising, competitor product offerings, market share.
Macroeconomic changes include income, economic growth and shocks.
There are several methods to assess and forecast demand. None yields
demand numbers that are a 100% guaranteed. However, using more than one
method improves accuracy and confidence levels. Most companies use
Simple Sales Analysis and Forecasting. Most companies also use Market
Size and Market Share Research. One of the most accurate method used
today is the combination of Market Size Research and Mind Share Research.

Forecasting is the process of estimation in unknown situations. Prediction

is a similar, but more general term, and usually refers to estimation of time
series, cross-sectional or longitudinal data. Risk and uncertainty are central
to forecasting and prediction. In more recent years, Forecasting has evolved
into the practice of Demand Planning in every day business forecasting for
manufacturing companies. The discipline of demand planning, also
sometimes referred to as supply chain forecasting, embraces both statistical
forecasting and consensus process.
Forecasting is commonly used in discussion of time-series data.

Forecasting Benefits

Save time, money, and effort with:

 Reduced inventory
23/01/2008 @V.E.S.

 Increased sales and capacity

 METHODS OF DEMAND FORECASTING

1. CONSUMER SURVEY METHOD:

The consumer survey method, as the name suggests involves

questioning the consumers with regard to his buying plans for the future
time period. This method is also known as survey of buyers intention and
opinion survey method. According to this method, the consumers are either
directly interviewed or questionnaires are mailed to them. So as to elicit their
future interviewed or questionnaires are mailed to them. So as to elicit their
future intentions to buy. Generally, households plans their future purchases
of consumer durable’s such as CTVs, refrigerators, designer furniture, kids
furniture, etc.

Consumer surveys are also conducted to find out the level of

satisfaction derived from the existing range of given product and these
substitutes so that appropriate changes are made in the product designer,
Usefulness and quantity. Similarly, when new products are launched,
samples are distributed amongst the consumers. This is particularly true
about consumers non-durables such as shampoo, toilet soaps, toothpaste’s
and detergents. After distribution of such products, the reaction of the
consumers are documented and studied to estimate the extent of future
23/01/2008 @V.E.S.

demand for the product.

WE ALSO HAD DONE OUR SURVEY WITH THE HELP OF

CONSUMER SURVEY METHOD BY DISTRIBUTING THE
QUESTIONNARIES AND TAKING THE FEEDBACK.

2. EXPERT OPINION OR DELPHI METHOD:

Expert opinion methods as a name suggests is a method whereby
opinions of the experts in the field of demand forecasting is sought by firms
who are planning to launch a new product or increase the production of an
exiting product. Such experts may be in – house or services may be hired
from outside experts consultancy firm and market research organization.
The veracity of such an expert opinion can be confirmed by a number
of methods. One such method is known as a Delphi method. It is
macroeconomic method of forecasting.

3. MARKET EXPERIMENTS :
Market experiments refer to the market studies and market
experiments in the field of consumer behavior conducted under real but
controlled marked conditions. Representative sub markets with
homogeneous feature in terms of population, income levels, social and
cultural composition, occupational distribution, task and preference, etc. are
chosen. Variables such as price, advertisement outlays are controlled and
introduced in the sub market to measure their impact on total demand. On
the basis of information collected, the elasticity of demand is computed and
the future demand for the given product is estimated.

Market studies and experiments can be classified into two types,

namely: test marketing and controlled experiments. In case of test marketing
a representative sub market is chosen where the given product is introduced.
More than one test area can also be chosen, if more varieties of given
product are to be introduced in the sub-market. By doing so, the firm can
study the impact of different demand determinants in different sub-markets
and chose the more effective market strategy.
23/01/2008 @V.E.S.

Controlled experiments and conducted to find out the demand for a

new product and its varieties under different brand names.

4. TIMES SERIES ANALYSIS:

Times series analysis is the study of movements of
variables through time. The effective use of time series analysis in
forecasting demand requires a reliable time-series data base. It is
assumed that the factors responsible for the past trends in the
variable to be projected will continue to hold good in future in a
similar manner. As the data available to firm relates to a time
period, there are bound to be fluctuations which can be attributed
to a general tendency. Such data is known to reveal a secular trend.
If the fluctuation in the data are on account of weather or climatic
changes, they are known to be a seasonal variations. Business
fluctuations or trade cycle are caused fluctuations in the data and
they are known as cyclic variations. Changes on account of natural
intervations such as earthquakes, famines, floods, etc are known as
random variations. However, in the time series analysis, only
secular trend is analysis as an authentic quantitative method is
available to analyse non-secular trends.

MICROECONOMIC STATISTICAL TIME-SERIES

ANALYSIS

Sales numbers from several time periods are correlated to one or several
factors such as price, advertising, market share, competitor price
demographics, product life stage, etc. Regression analysis and curve fitting
is then used to predict future demand.
The advantage of this method is that it includes relevant strategy as well as
competitor and macroeconomic trends. The disadvantage is that the outcome
may be biased because of important variables being left out, variables not
being completely independent, new competitive actions not being included.
23/01/2008 @V.E.S.

MACROECONOMIC STATISTICAL TIME-SERIES

ANALYSIS

This method is a macroeconomic statistical time-series analysis and purely

quantitative in nature. It fits linear and nonlinear curves into time series and
then extrapolating future values. Time series may be correlated to identify
leading and lagging indicators. The advantage of this method is that
recurring trends can be captured and extrapolated easily.
23/01/2008 @V.E.S.

PRODUCT ANALYSIS-NOKIA
23/01/2008 @V.E.S.

HISTORY OF NOKIA

Nokia's history spans more than a hundred years and contains many stories,
events and milestones brought about by the many twists and turns of the
world history and industrialization. Get ready to read about the varied
development of the Nokia Group!
In this presentation, Nokia's history is divided into five main areas: Timeline,
Directors, Businesses, Milestones and Nokia in Figures. Use the navigation
bar above to enter the different areas. The navigation bar opens when you
move your mouse cursor over it. You can also browse through Nokia's
history by clicking on the text links.
Nokia's history is a reflection of the development of Finnish industries from
forestry-oriented basic production to high-tech prominence. Nokia's journey
of over hundred years has had an abundance of choices. After several rounds
of mergers and divestments, investments and downscaling, Nokia finally
focused its resources on developing wireless telecommunications with an
unparalleled success. During the early years, the directors were often the
founders of the companies. The first decades were spent on growing and
developing the companies in spite of the hardships of the Famine Years,
World War I, the struggle for independence and many other problems.

2006: A new President and CEO – Nokia today

Olli-Pekka Kallasvuo becomes Nokia’s President and CEO; Jorma Ollila
becomes Chairman of Nokia’s board. Nokia and Siemens announce plans for
Nokia Siemens

RESEARCH & DEVELOPMENT

23/01/2008 @V.E.S.

After the merger of 1966-67, Nokia increased its investments in R&D. The
new multi-industry group also facilitated better planning of corporate
strategies and fields of business. An independent research center was
established in 1986 to supplement the R&D work carried out at different
businesses
The new center was appointed the task of refining latest international
information on new technologies and R&D processes for the business units'
needs.
In 1999, R&D activities were carried out in 44 centers and 12 different
countries, in addition to the Nokia Research Center. While R&D costs in the
early 80s amounted to 2-5% of Nokia's turnover, by 2002, this figure had
increased to 10.2%, with 38% of Nokia's employees (approximately 20,000)
working in R&D centers in 14 different countries.
Investments in Education and Training
In the 80s, CEO Kairamo paid much attention to issues related to
international education policies as well as co-operation between the industry
and universities. The need for a skilled workforce increased rapidly with the
emerging telecommunications industry.

SWOT ANALYSIS
23/01/2008 @V.E.S.

STRENGTHS:

 Versatility: your ability to adapt to an ever changing environment.

 Growth: your ability to maintain a continuing growth.

 Markets: your ability to penetrate or create new markets.

 With the help of consumer survey method, we are able to

make survey for nokia and we get the positive feedback.
 Nokia as product for demand forecasting help to do better
forecasting due to name and fame.

WEAKNESS:

 Correction of an identified defect.

 Protection through cover-up and prevention strategies to reduce the

exposure of your weaknesses.

 Aggression to divert the attention from your weaknesses.

 We had chance consumer survey method to helps it is very

time consuming.

OPPORTUNITIES:

 We get the opportunity the analyse the product, its demand and
various comment on the product.
23/01/2008 @V.E.S.

 To know detail about the demand including forecasting techniques.

 Marketing warfare: attacking the weak leader's position and focusing

all your efforts at that point, or making a surprise move into an
uncontested area.
 Collaboration: you can use your complementary strengths to establish
a sategic alliance with your competitor.

THREATS

 From our survey report we found that nokia has high level
competition with Sony Ericsson.
 Nokia is not only facing the competition with Sony Ericsson but also
facing the Reliance, Motorola, other mobile companies also.
23/01/2008 @V.E.S.

NOKIA’S FUTURE
As mobile usage grows in the world’s emerging markets, Nokia will
continue to develop affordable mobile devices that can contribute to
increased economic growth and quality of life.
At the same time, mobile communications is converging with
computing, digital imaging and the internet, making it possible for
people to use handheld devices for filming video, listening to music,
playing games, surfing the web and more. Nokia is shaping this
converging industry, pushing it forward with cutting-edge products
and the development of open standards.
Nokia’s success story is built on constant innovation. Our very human
technology is all about enhancing communication and exploring new
ways to exchange information. That’s why Nokia will never stop
finding new ways of connecting people.