Forecasting: crucial tool in listing/delisting process

Every time a Manufacturer faces the decision to launch a new product, needs to forecast sales. The manufacturer will have really to understand the consumer motivations for shopping the product. He will also cope with “shelf reality”. That means to list the new product he will have to ask the Retailer to make room for it. He will get an immediately answer back, that he will need to delist some other product. There is a high opportunity cost to delist existing items. Forecast should be enough solid and professionally calculated to create a “truly story” for the new product

ACNielsen reviewed 105 categories, and the estimated percent sales lost to delisting has been greater than the new product sales.

For the Manufacturer to convince the Retailer, the forecast for the new product is crucial. Forecast is the key for new launch at the listing time. Manufacturer will have to forecast and show the reasons to support the figure. Those reasons will be the “puzzle” pieces to understand objectively the way can be reached that number.

Many determinants can influence the forecast for a new product. If some Manufacturer name represents an asset to support its launches. Manufacturer name could vary the results of launch.

Segment of the category would be another important factor. Usually within a category some segments are up, while some are down. This could be one of the main components to decide the future of the launch.

Displays or Distribution are not less important to make sure the outcome of the launch.

All those factors and some others should be considered for forecast. The forecast based on those controlled factors will allow us to make corrections as the launch “landed” in the market and become part of the “shelf”.

Becoming a high quality forecaster is vital for the Manufacturer and Retailer. Using statistics tools, which back up the future sales, are essential in the process to persuade Retailers to make room for new launch.

Proving the new product will sell more than the one delisted become a very important issue

Some rules like one in-and one out have had tough time to show was a right decision. Advanced techniques should be used to have the best assortment.

There is not better tool to make the right decision for the best assortment than to forecast sales based on objective techniques.