SCIP UK Presents: Best in Class Competitive Intelligence | Forecasting - An E-Learning Event

© Copyright 2017 Milner Strategic Marketing Ltd

Best in Class Competitive Intelligence |

Market ForecastingJonathan Davenport

Milner Strategic Marketing

25th April 2017

2© Copyright 2017 Milner Strategic Marketing Ltd

• Milner Strategic Marketing Ltd is a business

consultancy that specialises in working with technology

companies

• Extensive experience of forecasting markets for FTSE

listed companies with high levels of accuracy

• Acknowledged experts: materials widely published

• I have built over 50 market models over the last 8

years with forecast models containing ~15m cells and

a forecast of up to 20 years

Milner Strategic Marketing Ltd


Market forecast models build industry attractiveness

understanding and competitive strength assessment


• Identifying revenue

growth opportunities

The forecast output is valuable to all departments. Using

one data source means the whole company is aligned

3 key applications of model output

• Supporting an internal

investment decision

1

• Developing the

product roadmap

2

3


• A survey of forecasting

professionals identified 4 key

challenges in forecasting

• As a result, I’m here to

explain how to address these

challenges and carry out Best

in Class Forecasting

• This will cover the 4 key

questions that are the stay

awake issues

Survey: The biggest stay awake issues

How do I inject data analytics

into the forecasting process?


• Decomposition forecasting breaks the market down into its constituent parts

• Data analytics should be used to understand the historic shape of these

constituent parts, before forecasting forwards

• This has three key benefits:

Data analytics can be used in decomposition

forecasting to give a deep market understanding

Greater

accuracy

Greater

transparency

Greater

consistency


Markets are complex. Data analytics improves

forecasting for every individual element

GeographyGeography by Segment

by Product Type

2012 2021

Ma

rket S

ize

(G

eo

gra

ph

y,

Se

gm

en

t, P

rod

uct T

yp

e)

Product Type C

Product Type B

Product Type A

2012 2021

Product A

Ma

rke

t S

ize

(G

eo

gra

ph

y, S

egm

en

t,

Pro

du

ct T

yp

e, P

rod

uct)

Geography by Segment by

Product Type by Product

2021

Country G

Country E

Country A

Ma

rket S

ize

(G

eo

gra

ph

y)

Country C

Country D

Country B

Country F

Geography by

Segment

2012 2021

Ma

rket S

ize

(G

eo

gra

ph

y,

Se

gm

en

t)

Segment E

Segment C

Segment B

Segment D

Segment A

Other Product DRest of World

N=6 N=3

Product B

Product C

2012

N=4N=8

How do I understand new

markets where we have limited

knowledge?


• To gain market specific insights, use both quantitative and qualitative analysis to

understand the dynamics of the market

• Desk research should be used first to see what information can be gathered on:

• Primary research can then be used to expand knowledge of:

Primary research is invaluable for quantitative and

qualitative market understanding

Market dynamics

Competitive landscape

Macro-economic outlook

Regulatory framework

Innovation and rate of

change

Channels to market

Customer requirements

and behaviour

Competitor behaviour

Technology attitude

Attitudes to vendors

Market size by segment


Primary research provides deep insights into

customer and competitor behaviour

Channel Partners

FOI Customers

Internal Experts

Industry Experts

Customer-focused data Competitor-focused data

Structured Interviews

Surveys and Analysis

Suppliers


Forecasting emerging markets: Diffusion of Innovation

with market churn provides a robust approach for new tech

New

Adopters

Total

Demand

Market

Churn

Innovators

(2.5%)

Early

Majority

(34%)

Late

Majority

(34%)

Early

Adopters

(13.5%)

Laggards

(16%)

Market Churn

Total Demand

New Adopters – Diffusion of Innovation

Diffusion of Innovation and Market Churn Methodology

How can I be confident that a

‘trend’ isn’t a one off, but here to

stay?


Diffusion of Innovation provides predictability,

though the macroenvironment affects trendsConsumer product S-curves Source: North (2012)

In 1920’s America two new products were

launched the refrigerator (black line) and the

‘clothes washer’ (pink line)

By 1940 40% of households had a refrigerator

(black line) and 25% had a ‘clothes washer’

(pink line)

Forecast

By 1946 penetration of ‘clothes washers’

had fallen to ~15%


There is science to correctly identifying trends

Data Points

Hypothesise

reasons for

‘trend’

formation

Test and refine

‘trend’

hypothesis

Score ‘trend’

likelihood

Update

scenario and

forecast

Activity:

Data Collection

Activity:

Trend – Yes/No

Test Trend

Hypothesis

Score Trend

LikelihoodLikely Scenario?


The trend can be a hard trend or a soft trend

Hard trends

Low degree of

uncertainty

Forecast

based on

measurable &

predictable

factors

Soft trends

High degree of

uncertainty

Projection

based on

statistics &

hypotheses


Forecasting mature markets: Anchor Metrics can

be used to calculate sector demand

Anchor

Metric

Sector

Demand

Output

Multiplier

Anchor Metric

Production Output Multiplier

Total Segment Demand for one

time period

Total Segment Demand over

time

The Anchor Metrics Methodology

How do I deal with change &

unknowns (new entrants)?


Market mapping or perceptual mapping means you

can identify which competitors will succeed

Well-known company

High priceLow price

Boutique company


Scenario planning helps you anticipate the

dynamics of different potential futures

The Day After Tomorrow

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Describe each scenario

Analyse potential scenarios

Identify critical variables

Variables

Historic sales

Consumer

Adoption Theory

Market

penetration

Seasonality

Country

demographics

Economic factors

Forecast the impact of scenarios

1

2

3

4

Want to know more?


Strategy Handbook

• Strategic tools that provide executives and

managers with structured approaches to work

through their situation and options are explored

and critiqued

Forecasting the Future for Profit

• The white paper covers a range of forecasting

approaches in detail and the benefits of a robust

market forecast model

For a copy of either white paper, please drop me an

email ([email protected])

If you want to dig deeper, Milner has two white

papers which provide further tools and techniques

Jonathan Davenport

Head of Market Analysis

[email protected]

+44 (0)7793 916886

Business

SCIP UK Presents: Best in Class Competitive Intelligence | Forecasting - An E-Learning Event