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Simple Steps To Successful Forecasting

Retaining loyal customers, generating turnover and responding to global competition are becoming increasingly challenging.  And the current economic climate doesn’t help as financial pillars appear to shake and stumble, draining confidence amongst businesses of all kinds. 

In times like these, it is crucial to remain focused.  Forecasts are a useful foundation for setting goals and KPIs based on predicted future sales and production, and adjustments to both production and marketing can be made in reviewing forecast figures and actual results.

Forecasts are nevertheless tricky to create as it is difficult to obtain reliable data and it is often impossible to predict the future beyond the short to medium terms.  Furthermore, the data gathered can be biased, out of date or flawed.

A recent article in the Wall Street Journal discusses the collaboration of company departments – chiefly the sales, production and marketing departments – in creating forecasts, and suggests seven rules companies can follow to make the most of collaboration in their forecasting efforts.  These can be summarized as follows:

1.  Involve senior executives.  Senior executives need to be on board, not only to achieve buy-in to the forecast, but also to approve and action spend on forecasting technologies that enhance the collection and sharing of data.  The author suggests:
   One way to get the attention of key executives is to calculate what a one-percentage-point improvement in forecast accuracy may mean to the company.  As supplies come closer to demand, customers can buy more, stores return less, and more revenue goes straight to the bottom line instead of paying for excess storage and handling.  For a large company, it could add millions of dollars to the bottom line.
2. Explain the mutual benefits.  Forecasting needs to benefit all those involved in the data sharing process.  The authors argue that whilst salespeople may want to focus on selling and not forecasting, the salespeople would however become interested if they believed that a more efficient supply chain would help make the product available according to customers’ requirements, thereby increasing sales commissions.
3. Clearly define goals and agreements.  Setting clear goals and metrics are paramount to increasing efficiency, especially of supply chains, such as reducing the number of days of inventory on hand.  The authors cite Procter & Gamble as an example: the company uses a scorecard that looks at on-time deliveries and the number of times a store runs out of a product, amongst other things.  The goals should constantly be reviewed to eliminate unrealistic expectations between departments and to determine whether goals are met, thereby enabling the most effective changes to be implemented and improvements made.
4. Use the best technology.  A central database is required to enable different parties to share data, such as sales, inventory and purchasing data (historical and current).  The best technologies should be used to capture, store and share this data.
5. Focus where revenue and profits are greatest.  Since resources are limited, companies should focus forecasts on products that yield more revenue and profits.  A deviation from this could result in staff devoting more time to less important and lower value products, rendering the forecasting a wasteful exercise.
6. Link incentives to companywide goals.  Incentives and rewards should be based on achievements of the company as a whole, as opposed to those of particular departments.  This enables effective and reliable forecasting, as opposed to deliberately low forecasting that is set too low with the aim of bettering predictions and therefore making a certain team look deceptively good.
7. Aim for continuous improvement.  It is crucial to continuously check the data to eliminate any errors that could contaminate the forecast, such as prejudiced assumptions or incorrect benchmarks.

Finally, we would like to add a further tip to successful forecasting.  The seven tips above are based on an inside-out approach, i.e. the view from within the company.  It would be beneficial to test forecasts from an objective standpoint, involving market and competitive intelligence.  For example, market research could be used to create comparable datasets (such as competitor forecasts or market forecasts as a whole), and this can be achieved through desk research, statistical extrapolation, and a select number of interviews with industry experts (such as large customers, trade associations, competitors and distributors). 

B2B International USA’s Business Development & Research Manager Julia Cupman says:

For more information on forecasting and how market research can add value, including different types of forecasts, the role of forecasts and forecasting methods, please take a look at our white paper: Forecasting and Scenario Planning.

Posted in Desk Research, Forecasting, Julia Cupman, Market Assesment, Market Intelligence, Market Research, White Papers |
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Business Brands – The UK’s 10 best

Which brand would you name as the UK’s current top business brand?

Well, according to a Superbrands survey compiled by a council of senior business leaders and 1,500 independent professionals, search engine Google is the brand which has made the most impact on the UK business sector.

Knocking the BBC from last year’s number one spot, Google topped the poll of 500 brands by scoring highly in terms of quality, reliability and distinction. Interestingly, along with eBay, Google is the only brand in the top 50 which has appeared on the scene since 1990.

Amongst the other brands which feature in the survey, there is a heavy slant towards long-established British stalwarts (like British Airways and BP) or other powerful corporations which can trace their origins to the UK (such as GlaxoSmithKline). Indeed, on average, the members of the top 50 are 90 years old, demonstrating the power of longevity and familiarity in British business.

This year’s top 10 business superbrands:

• Google
• Microsoft
• BP
• BBC (Worldwide)
• GlaxoSmithKline
• Rolls-Royce Group
• Financial Times
• British Airways
• Fedex Express
• Hertz

However, as we inch ever closer towards the threat of a sustained period of economic uncertainty, it will be more important than ever to create or consolidate a strong brand. Well-established and newer brands alike will have to look long and hard at themselves over the coming months, with corporate positioning likely to be one of the keys to success.

It will certainly be interesting to see what happens over the coming 12 months and we at B2B International await the results of next year’s Top UK Brands survey with interest…

More information about branding is available through the following B2B white papers:

• Branding in business-to-business markets
• The value of brands

Posted in Branding, White Papers |
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What Research Means To Advertising

One of the great of the ad world, David Ogilvy, once said that advertising people who ignore research are “as dangerous as generals who ignore decodes of enemy signals.�

Whilst most people in advertising accept that they and researchers are on the same side of the battle for business and consumer hearts and wallets, it’s often an uneasy alliance.

Dan O’Donoghue, Worldwide strategic Planning Director with Publicis Worldwide says “All the great advertising people, whether you consider David Ogilvy or John Webster or Bill Bernbach, you’ll find they were all advocates of market research.�

“What’s happened in the last 10 to 15 years is the creative area’s been taken over by loonies. They see researching, understanding people who they need to sell things to as a bad thing. That’s led to a bad relationship between advertising and research, but it’s historically inaccurate.�

Loonies or not, something’s clearly soured the relationship. So, where has it all gone wrong? The problem seems to be not so much with the research itself but the way the results are delivered or interpreted.

“A lot of planners would say market research gets in the way!” Says Jon Steel, planning director with WPP, the media group led by Sir Martin Sorrell that includes creative agencies Ogilvy & Mather, Bates and JWT.

“What they’re talking about is bad market research or market research applied wrongly by the client. I’m in favour of any information that can help me make a better decision, but some people take what it says too literally, and if you follow research findings to the letter, you’ll make big mistakes and your work will be very dull. You have to believe in a healthy degree of opinion and intuition.â€?

The founder of Sony, Akio Morita, used to say that if he’d listened to market research, he’d never have launched the Walkman.

At creative agency BBDO Europe, there’s no policy on when, how much and what kind of research should be applied to a campaign, but market research, particularly qualitative research, is seen as a vital part of the process of creating and testing advertising. BBDO has DaimlerChryler, FedEx, Pepsi and Ikea among its list of clients around the world.

“Without proper research, I think advertising becomes simply a game of chance and nobody wants to play a game of chance with the kind of sums we’re looking at� says Williams Eccleshire, the agency’s Europe chairman and CEO.

Undoubtedly it’s a help if it’s used properly but if it’s misused, it becomes simply a crutch to support a bad decision.�

These is a growing focus on research meaning researchers need to provide insight in addition to facts and figures.

In the future research will spilt into two divisions, one to carry out fieldwork and the other to have more of a consultancy and interpretive role.

The future of the relationship between market research and advertising will not, it is clear, be without its challenges, even though the prospects are looking up.

If you wish to know more on this topic, there is a B2B International White Paper on “Making the promotional pound go further.�

Posted in Advertising Research, Market Research, New Product Development, White Papers |
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Podcast: Guiding Acquisitions and Investment Policy

This week’s podcast (available at www.themarketresearchpodcast.com – B2B International’s new podcast website) written by Paul Hague, Director of B2B International, looks at Guiding Acquisitions and Investment Policy:

The traditional approach to acquisitions
The role of market research in acquisition studies
Research to guide investment
Technology transfer
Summary

For your convenience you can listen to this Podcast using the player below or visit our podcasting site.

Guiding Acquisitions and Investment Policy (18:06)
[http://www.themarketresearchpodcast.com/podcasts/b2b_podcast_17.mp3]

Guiding Acquisitions and Investment Policy (Right Click and Choose Save As – if you wish to download)

Posted in Acquisition Research, Market Research, Podcast Audio, White Papers |
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Switching In The Financial Services Industry – Part 3 of 3

Influences on the buying decision

Let’s for a minute step outside the field of financial services and consider the mind of the general public in our search for how emotions effect buying decisions. Take the car buying public. Can we really say why we switched from that practical estate to a 4X4 off-roader to take the kids to school? For sure the question gets rationalised – “we have a steep drive and it can be difficult to get out of in the snow” (yes, on the one day a year that it does snow!); or “I feel safe in it with the kids” (yes, even though the stability is less than for most conventional saloons). In general we recognize more readily these emotional pulls and tugs in other people than we do in our rational selves.

The buyer of financial services is no less influenced by emotions when they make their decisions. Figure 3 gives a stylized indication of how the emotional factors according to the types of goods we are talking about – but even in the most mundane of products, emotions are known to play their part, often accounting for 10% or more of the buying decision.

Figure 3 The Influence Of Emotional & Rational Factors On Buying Decisions

This discussion is leading us to a point where we can build a check list of factors that prompt switching:

Switching more readily takes place when:

- The product is a commodity supported by very few services
- There is no strong relationship between the buyer and the seller
- Products and services are easily interchangeable with little or no testing/prequalification
- The product or service is not supported by a strong brand
- A market is awakened by a new supplier or an energetic supplier who runs a campaign that talks about the benefits of buying a different product or service
- The buying company has switched a number of times and has no fears of the difficulties of switching again
- The product or service is not of strategic relevance to the buying company
- The financial benefits of switching to a different product or service are considerable.

Stopping the flow

Once we have won a new customer, our aim should be to make sure that from now on there is as little switching as possible for it is agreed that finding a new customer is 10 times more expensive than selling a product to or servicing an existing customer. We conclude the white paper with three important ways to generate loyalty – in other words, stopping switching:

Build a strong brand

A definition of a strong brand is one that people insist on to the exclusion of all others. A strong brand is a great means of creating loyalty and stopping switching. A key to strong branding is to build on and emphasise values that have a strong relevance to the market and which are not the high ground of competitors.

Build interlocking relationships

Strong brands involve far more than the promotion of company names, logos and value statements. They are strengthened enormously by the relationships built up between the financial services company’s sales teams and the customer. It will be hard to dislodge the sales person who regularly calls on a customer, that sends a birthday card and that calls occasionally to check if everything is in order.

Segment your customers by needs

We conclude this white paper where we came in. At the end of the day, all marketing is about segmentation; namely understanding and responding to the different needs of customers. With this understanding it will be possible to create different customer value propositions that meet those needs more closely and so resonate with customers better than a vanilla offer for everyone.

For more details on our services please call our offices on +44 (0) 161 440 6000 and ask to speak with one of our research executives.

Posted in Market Research, Pricing Strategy, Qualitative Research, Quantitative Research, Segmentation, White Papers |
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