Selection of Market Demand Forecast Methods: Criteria and Application

• Published in: Inžinerinė ekonomika 2008, Vol.3 (3 (58)), p.19-25
• Main Author: Pilinkiene, V
• Format: Article
• Language: English
• Subjects: Business Economy / Management; Consumer demand; Demand analysis; Demand functions; Economic forecasts; Estimation; Furniture; Lithuania; Market analysis; Methodology and research technology; Policy, planning, forecast and speculation
• ISSN: 1392-2785

The article deals with the theoretical aspects of the market demand method selection criteria and their application in practice. As the definition of market demand and conditions is related to the achievement of important general strategic decisions and consumers’ behaviour on the competitive market, the accurate identification of the market demand method selection criteria and their application can reduce decision indefiniteness. Hence, the main aim of the article is to analyse market demand forecast method selection criteria, and apply them in developing Lithuanian furniture demand forecast. The theoretical part of the article starts with the analysis of the forecast method reasoning and forecast method classification under various economic literature criteria. The analysis of the main forecast method groups disclosed that it was rather difficult to determine the advantage of any method in forecast estimation, whereas, always the risk of the wrong method selection remained. It was determined that usually unanimous authors’ opinion on the complex application of quantitative and qualitative forecast methods differed in two aspects: one group of researchers supported the priority of quantitative forecast methods by using qualitative forecast methods as an auxiliary or alternative means, while the other group of authors stated that equal application of both types of forecast methods guaranteed higher reliability and carried more information. Quite often any market demand forecast encounters the relevant forecast method selection problem. It should be noted that there are advantages and disadvantages of the forecast method selection in every case; therefore, the analysis and differentiation of the main forecast method selection criteria is expedient. The selection of the forecast method should be based on several criteria taking into account the applicability of the forecast method complexity, i.e., forecast accuracy level, period of time, the scope of initial data, forecast costs, and the level of result appropriateness and applicability. The article deals with the research related to the selection of the forecast method for the Lithuanian furniture industry to define the furniture demand forecast for 2007. The object of research is furniture sales on the national market that reflect the solvent part of the furniture demand. The comparison of the forecast accuracy assessment indicators that were estimated by using different forecast methods indicate that the