New Product Sales Forecasting in the Mobile Phone Industry: an evaluation of current methods

Today’s technological development and global competition in markets, requires suppliers of products and services to introduce new products or to improve their current products in order to survive. Fast technological development in the high tech sector also makes this global competition even harder for firms in today’s market place, because technology advances have shortened the life cycle for many products. Demand forecasting is crucial for firms operating in this environment who need to make decisions relating to future production capacity, marketing budgets, human resource planning, and research and development. This is especially true of pre-launch forecasts of demand time series where products have a short life cycle. However, producing such forecasts is a difficult, complex and challenging task mainly because of the unavailability of past data and short life cycles of earlier products. This paper assesses the pros and cons of a range of new product forecasting methods where products have short life cycles. The potential effectiveness of methods such as individual and group management judgments, prediction and preference markets, intention surveys, diffusion models, conjoint analysis, market testing and agent based modelling, are evaluated in the context of the UK mobile phone industry. Areas where there is a need for future research are identified.