Sudden, unexpected, unpredictable are some common words that appear in almost any article that mentions COVID-19. Of course, the coronavirus pandemic affected every industry, but if for some its impact was negative, for others, on the contrary, it opened new opportunities and strengthened existing categories. This is due to global constraints that have resulted in highly uncertain consumer demand.
Under such circumstances, the use of historical data could not give a correct understanding of the market. Predictive analysis mathematical models that existed before COVID-19 are no longer useful. Customer forecasting teams will need to update their models to help companies manage their offerings again.
We have identified 5 key factors to consider when updating your forecasting models for consumer demand:
1. External factors:
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Impact of economics and health
How do government policies, recommendations of economic organizations and health care organizations influence consumer behavior, as well as industry behavior? What recommendations are favorable?
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Industry demand
What is the demand at the industry level? Which industries are coping well with growing demand and which are not? For example, worldwide, luxury goods are experiencing a decline in demand, while health goods are experiencing an increase in demand.
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Competitive initiatives
How are your competitors doing? What initiatives do they put forward?
2. Consumer trends:
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Warehousing
Are customers stocking items in specific categories? Are these categories with long or short shelf life? Will the volume of purchases of these goods decrease soon?
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Channel preference
Have consumers changed their buying channel preference? Is there a preference for online channels over shopping? Is the demand growing online or in the store?
3. Product Trends:
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New normal demand (up and down)
How do product categories behave? Is there an increase or decrease in demand? Will this trend last?
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Halo / Cannibalization Trends
Is there an impact on related product categories through the halo (increase) of purchases, or through cannibalization (decrease) of purchases? For example, has low electronics demand affected battery sales?
4. Events and promotions:
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Decreased internal support
Was there a reduction in promotions or planned promotional activities due to restrictions or performance issues?
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Reduced or neutral consumer response
Has consumer response to current promotions decreased?
5. Internal factors
After the pandemic, companies also had to rethink their initiatives and strategies. Consider changes made to one or more of these factors:
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Staff and hiring budgets
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Operating budgets
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Marketing Initiatives
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Product prices
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Inventory and delivery
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Logistics
Taking these key factors into account when predicting consumer demand will help companies prepare for such situations. However, only to the like. Given the uncertain nature of the market, it must be remembered that none of its forecasts can give a 100% guarantee. It is important to have critical thinking and the ability to make decisions through regular agile testing and learning from its results. For best results in this process, we recommend using AZN solutions.