Is there any rule of thumb or estimate that one can project for volume of product that may be bought at initial manufacture?
a. If you design a chair/table/shelving ( and the design could be called at least “good”)
b. You create a “reasonable” marketing and brand strategy.
c. Product reception at shows is “good”.
d. Manufacturing and delivery is worked out.
e. What is a “reasonable” expectation of expected volume?
IS there any “rule of thumb”?
10 products a month? 50? 100? etc.
You record an album/CD. You do a focused marketing campaign, etc. etc.
From “industry” history you should sell N records…even if the album is horrible.
N population/possible buyers avaiable= NN sales , just by statistics.
I guess I’m saying ignore the product (hypothetically of course since the product IS important). If you market to N, in N quantity, minimum N buyers exist.
Or take MP3 players. Some are REALLY badly designed, but by controlling the price and marketing, sales occur. How many, I’m sure there is a Marketing formula out there…
Is it a luxury yacht? Is it good? You might sell 3 a year.
Your question is situationally dependent. At the end of the day you can do allt he Market research you want. Until you have a signature on a sale you have no clue what you’re going to need per month.
In electronics products we follow a ramp up path. A general path is:
Eng 1 - 10 - 20 units used for engineering test and debug, a few marketing units, setting up Automatic Test Equipment, etc.
Eng 2 - 25 - 50(ish) units - Iron out design issues, Understand better assembly times, etc.
SPR 100(ish) (Small Production Run) - This is your assembly line “warm-up”. Find the bugs in the assembly system, etc.
It is during the Eng 1, Eng 2 and Pilot phases of the program that Marketing and BizDev better be on their horse flogging the product. Getting people up to speed and making sales. Because that will dictate the numbers as you head into the next phases (Pilot/production). You can have the best written Marketing plan but it ain’t worth the paper its written on if you don’t make a sale.
So if you design a modern, well designed chair (or other). Market well. Price reasonably…
“You might sell … a year”.
It IS product dependant. I can’t agree with you more, BUT it is also NUMBER dependant. Population, price, market focus, production, can be predicted (to a degree). So if those can be predicted why can’t a “might sell no.” be predicted based on the variables? (yes I know trends ,styles etc. come into play)
I hope this discussion is meaningful. Thanks for all you comments.
commerical would be somewhat eaiser than consumer, and yes price is a issue due to the size of the pond you want to enter (hey a 4,000 buck chair vrs a 4 buck one…dont take a big brain). With out real good understanding of your target market, distrubution plan and good and I mean rigiously good consumer feed back your just thowing darts at a moose.
ask the distributors you’ve met at the trade show how much product of a similar type they move per year/onth, etc. that should give a good idea of potential (x “X” factor of number of distributors.
For example, for footwear, ive done excel spreadsheets which calculate an estimated number of pairs sales by calculating # doors to knock on (current customers + new potential doors) x % of penetration (based on previous seasons and product feedback) x shelves (ie number of styles) x number of pairs per style that retailers normally take. for a small run, it worked out pretty accurate, but obviously if you are going to hit bigger markets or mass retailers, the numbers would change a bit.
best bet is to ask the buyers. even calling a local shop that carries similar product and asking them how many chairs of a certain type they sell should give you a starting point. you should be able to estimate the number of shops you hitting given it would likely be a relatively small number if you are doing the marketing and distribution yourself.
Another thought might be to ask 100 people (or however many you can) who are potential buyers and determine a percentatge. Say 50% or 25% will certainly buy. Then determine how many can be distributed given available channels and production capacity, and apply the percentage.
Simple formula but it may serve as a starting point.
The best you can do is get a market research book. There you’ll find extensive explanation of demand forecasting techniques.
There are qualitative and quantitative types of research, it all depends on your needs and on the information you can get. There is no magic formula, and the quantitative models are rather complicated to be explained here, there is much math and statistics involved.
Experts panel (managers, distributors, etc.)
Sales force estimate.
Customers expectations survey.
Quantitative (more objective results):
Market research (Buying intention survey, Product/concept test, Market test)
Temporal series (Random walk, Mobile medias (don’t know if it is the right translation, Exponential flattening, Series decomposition, Box-Jenkins, etc)
Get a book and take a good read
Also go on and google [“demand forecasting” technique OR method] and I’m sure you’ll find plenty more information.