Question Type: Business Economics
This question tests your understanding of demand estimation techniques in business economics. The correct method for estimating the demand for a new product based on an existing product's growth is the substitute approach.
Step-by-Step Logic:
- Substitute Approach: This approach leverages the existing product's sales data and growth patterns to predict the potential demand for a new product that serves as a substitute or alternative. If the existing product has a strong growth trajectory, it suggests potential market demand for a substitute product. The characteristics and market position of the substitute product are compared to forecast the new product demand.
- Why other options are incorrect:
- Growth Curve Approach: While growth curves are used in business analysis, they don't directly relate the growth of one product to the demand for another, as the substitute approach does.
- Vicarious Approach: This term isn't a standard technique in demand forecasting.
- Opinion Polling Approach: This relies on direct consumer feedback, not on the inherent relationship between existing and new product demand.
Core Logic/Pattern: The core logic lies in identifying the relationship between a new product and an existing substitute product to estimate demand. The existing product's growth provides an indirect measure of the potential market size for the new product.
Therefore, the correct answer is the substitute approach.
Important Questions from Forecasting
The correlation coefficient between two variables X and Y is found to be 0.6. All the observations on X and Y are transformed using the transformations U = 2 – 3X and V = 4Y + 1. The correlation coefficient between the transformed variables U and V will be
Which of the following lines is known as the trend line?
An XYZ television supplier found a demand of 200 sets in July, 225 sets in August and 245 sets in September. Find the demand forecast for the month for the month of October using simple average method.
Name the human resource demand (need) forecasting technique, which solicits estimates of personnel needs from a group of experts, usually managers. The HRP experts act as intermediaries, summarise the various responses and report the findings back to the experts. The experts are surveyed again after they receive this feedback. Summaries and surveys are repeated until the experts' opinions begin to agree. The agreement reached is the forecast of the personnel needs.
Select the correct option :
Which of the following is a technique used for forecasting?
