Qualitative Forecasting: Four Well-Known
Qualitative Forecasting: Four Well-Known
FORECASTING numerical analysis. This type of forecasting relies upon the knowledge of
highly experienced employees and consultants to provide insights into future
outcomes. This approach is substantially different from quantitative
forecasting, where historical data is compiled and analyzed to discern future
trends.
● The qualitative (or judgmental) approach can be useful in formulating short-
term forecasts and can also supplement the projections based on the use of
any of the quantitative
{ methods.
FORECASTING ● Executive opinions
METHODS ● Delphi technique four well-known
● Sales force polling
● Consumer surveys
● PERT-derived forecast
EXECUTIVE ● The subjective views of executives or experts from sales, production,
OPINIONS finance, purchasing, and administration are averaged to generate a
forecast about future sales. Usually this method is used in conjunction with
some quantitative method, such as trend extrapolation. The management
team modifies the resulting forecast, based on their expectations.
ADVANTAGE ● The forecasting is done quickly and easily, without need of elaborate
statistics. Also, the jury of executive opinions may be the only means of
forecasting feasible in the absence of adequate data.
DISADVANTAGE ● This, however, is that of group-think. This is a set of problems inherent to
those who meet as a group. Foremost among these are high cohesiveness,
strong leadership, and insulation of the group. With high cohesiveness,
the group becomes increasingly conforming through group pressure that
helps stifle dissension and critical thought. Strong leadership fosters group
pressure for unanimous opinion. Insulation of the group tends to separate the
group from outside opinions, if given.
SALES FORCE ● use as a forecast source sales people who have continual contact with
POLLING customers. It is believed that sales people, who are closest to the customers,
have significant insights into the future market.
● This method heavily depends on the collective wisdom of salesmen,
departmental heads and the top executives.
● Sales - force polling” or “Opinion poll method”
● Under this method, sales representatives, professional experts, the market
consultants and others are asked to express their considered opinions about
the volume of sales expected in the future.
● The logic and reasoning behind the method is that these salesmen and other
people connected with the sales department are directly involved in the
marketing and selling of the products in different regions.
● Salesmen, being very close to the customers, will be in a position to know and
feel the customers ’ reactions towards the product. They can study the pulse
of the people and identify the specific views of the customers.
● Further, the opinions or estimates collected from the various experts are
considered, consolidated and reviewed by the top executives to eliminate the
bias, optimism or pessimism of different salesmen. These revised estimates
are further examined in the light of factors like proposed change in selling
prices, product designs, advertisement programs, expected changes in the
degree of competition, income distribution, population, etc.
ADVANTAGE ● It is simple, less expensive and useful for short run forecasting, particularly in
case of new products.
DISADVANTAGE ● The main drawback is that it is subjective and depends on the intelligence and
awareness of the salesmen. It cannot be relied upon for long term business
planning.
CONSUMER ● It is where companies obtain information about consumer satisfaction levels
MARKET with existing products and their opinions and expectations regarding new
SURVEY products and services.
● It involves collecting necessary information regarding the current and future
demand for a product. It carries out the studies and experiments on consumer
behavior under actual market conditions.
● In this method, some areas of markets are selected with similar features, such
as population, income levels, cultural background, and tastes of consumers.