Demand forecasting involves the following steps:
1. Determine the purpose for which forecasts are used.
2. Subdivide the demand forecasting program into small I parts on the basis of product or sales territories or markets.
3. Determine the factors affecting the sale of each product and their relative importance.
4. Select the forecasting methods.
5. Study the activities of competitors.
6. Prepare preliminary sales estimates after, collecting necessary data.
7. Analyze advertisement policies, sales promotion plans, personal sales arrangements etc. and ascertain how far these programs have been successful in promoting the sales.
8. Evaluate the demand forecasts monthly, quarterly, half yearly or yearly and necessary adjustments should be done.
9. Prepare the final demand forecast on the basis of preliminary forecasts and the results of evaluation.
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