In our last write up we saw the Specialist opinion method and Delphi method of demand forecasting.

Now let
us see the next method namely Consumer Survey.

The goods and services are made available in the market for consumers. So who better than them can
understand the demand for the products? This is what this method is all about.

Demand forecasting through consumer survey could be done through three ways as mentioned below:

 Method of Total Enumeration

 Survey through Sample

 Method of End use

Let’s see each of these in detail:

Method of Total Enumeration: When the demand is forecasted on the basis of possible quantities that all
the consumers would purchase (in the period of forecast) then it is called as the total enumeration method.
In this method the consumers are questioned about their future purchase amounts of product and responses
of all of them are taken into consideration by the forecaster.

This method is the most straightforward one because the forecaster simply sums up the possible demand of
all the consumers to arrive at the future demand. The demand forecast through this method is likely to be
more exact because it is simply recording the data and arriving at the forecast and is free from bias. But if the
numbers of consumers are too many then this method would not be viable. This method conjures a lot of
time and is dearer. Also care needs to be taken while recording the data as any error here would impact the
final conclusion.

Survey through Sample: A sample is a part of the total. In this method the forecaster selects a sample or
panel of consumers who would generate sense of the demand for the product. To state in other words the
forecaster selects a group of consumers from the total consumers of the product and then carries out the
forecast considering the responses given by the sample group. In this method the consumers may be asked
questions pertaining to various factors that would impact the demand for the product. These factors would
be determinants of demand like the incomes of the consumers, prices of related products, price of the
commodity itself and so on.

How is the sample survey done? Direct interviews could be done or the forecaster may prepare detailed
questionnaire to generate responses from the consumers. The urgency of forecast and availability of funds
also would determine the kind of approach the forecaster would like to go with while conducting sample
survey. Once the sample survey is done the forecaster would then derive the overall demand for the product
on the basis of overall demand of the sample group.
Sample survey is quite useful in case of new products as it would give direct responses from the end
users. The changes in preferences of consumers, impact of promotional activities could also be understood
through sample survey. The forecaster need not carry out the survey for total consumers and needs to focus
on the sample group only. Though cost friendly and less time consuming this method is subject to certain
shortcomings like sampling error and lack of exact answers. The cooperation by the consumers also plays an
important role in arriving at the conclusions.

Method of end use: This is yet another method through which demand forecasting could be done. What if
the product has more than one use? It means a product may be used as an intermediate product (used in the
production of other products), used for final consumption and can also be exported as well as imported. So
how is demand forecasted through this method? Here the demand for the intermediate product could be
estimated. The demand of exports net of imports could be estimated and demand of final consumption could
be predicted. It means that here the forecast will be done for three components (for the firms using
intermediate products, for the exporters and importers and survey of the end users). This all parts are then
added up to arrive at the final forecast.

One of the distinguishing features of this kind of survey is that it provides forecast sector wise because the
forecaster gets an idea of demand for the product through various uses since it is carried out by considering
multiple uses of the product. The major drawback of this method lies in the requisite of accurate production
plan for the coming times by the firms.

This was about the consumer survey method. In our next write-up we will be discussing the market
experiments method of demand forecasting.

Consumer Survey Method

Consumer Survey Method includes the further three methods that can be used to interview the
consumer:
 Complete Enumeration Method: Under this method, a forecaster contact almost all the
potential users of the product and ask them about their future purchase plan. The probable
demand for a product can be obtained by adding all the quantities indicated by the consumers.
Such as the majority of children in city report the quantity of chocolate (Q) they are willing to
purchase, then total probable demand (Dp) for chocolate can be determined as:
Dp = Q1+Q2+Q3+Q4+……+Qn
Where, Q1, Q2, Q3 denote the demand indicated by children 1, 2,3 and so on.

One of the major limitations of this method is that it can only be applied where the consumers
are concentrated in a certain region or locality. And if the population is widely dispersed, then
it can turn out to be very costly. Besides this, the other limitation is that the consumers might
not know their actual demand in future. Due to this, they may give a hypothetical answer that
may be biased according to their own expectations regarding the market conditions.

 Sample Survey: The sample survey method is often used when the target population under
study is large. Only the sample of potential consumers is selected for the interview. A sample
of consumers is selected through a sampling method. Here, the method of survey may be a
direct interview or mailed questionnaires to the selected sample-consumers. The probable
demand, indicating the response of the consumers can be estimated by using the following

formula:
Where Dp = probable demand forecast; H = Census number of households from the relevant
market; Hs = number of households surveyed or sample households; HR = Number of
households reporting demand for a product; AD = Average Expected consumption by the
reporting households (total quantity consumed by the reporting households/ Number of
households.
 This method is simple, less costly and even less time-consuming as compared to the
comprehensive survey methods. The sample Survey method is often used to estimate a short-
run demand of business firms, households, government agencies who plan their future
purchases. However, the major limitation of this method is that a forecaster cannot attribute
more reliability to the forecast than warranted.

 End-use Method: The end-use method is mainly used to forecast the demand for inputs.
This method of demand forecasting has a considerable theoretical and practical value. Under
this method, a forecaster builds the schedule of probable aggregate future demand for inputs
by consuming industries and several other sectors. In this method, during the estimation of a
demand the changes in technological, structural and other factors that influence the demand is
taken into the consideration.
The end-use method helps in determining the future demand for an industrial product in
details by type and size. Also, with the help of end-use method, a forecaster can pinpoint or
trace at any time in the future as to where, why and how the actual consumption has been
deviated from the estimated demand.

Thus, these are some of the most commonly used consumer survey methods, wherein the
customers are directly asked about their intentions about the product and their future purchase
plans.