Introduction:
Customer Needs Projection is a technique used to project future repercussions and outcomes for today’s decision. It helps the organization to plan accordingly and to make their plans future-proof.
Customer Needs Projection is yet another way of having an estimate of customers’ willingness to buy their product shortly.
The motive of an organization is to create a product that suits their targeted audience. customers tend to demand certain products as per their needs.
An organization with a plan to survive and earn profits want their product to meet the customer requirements.
Customer needs show no pattern as it changes with certain factors like seasonality, taste and preferences, price of substitute goods, and many more.
For instance, If the price of tea increases, people will start to demand its substitute more. That is Coffee(There are exceptions as some people don’t care about the price associated with that product).
One of the prominent factors for customers’ willingness to buy a product is price.
Price and demand have an opposite relationship to each other.
If there is a rise in the prices of a particular product, it is less likely that a large audience will buy that product. Companies should consider the price sensitivity of their targeted audience before pricing
Organizations need to have a close eye on the customers to act.
Customers demand certain items, and companies adjust their production as per the buyers’ willingness to buy that product.
Organizations take care of demand in the present time and forecast demand from the future to increase or decrease production to avoid any surplus or deficit of stocks in the market.
Projection is the practice of analyzing the predictions that can be used in the decision-making process. These estimates can be long-term for the overall demand and short-term for any particular product.
Methods for Projecting customer intent:
- Subjective
- Time-series
- Informal
Subjective:
Subjective methods are techniques that are not based on any Quantitative models but are more inclined towards judgments and opinions. The opinions can be made on the surveys of scientific opinions and intuitive predictions about future events.
Time-Series:
The method assumes that the previous data that is already available holds a significant value. Where the data is incorrect is very rare and does not create much impact.
Informal:
The need of a product depends upon various factors such as price, substitute goods, complementary goods, taste & preferences, competition, etc.
Organizations must analyze the variable affecting these factors for their product.
It creates a relation between two or more factors and makes the organization understand their influence on each other.
Exceptions to the obvious:
Production of the goods is a significant aspect of inventory management.
Consistent production is the requirement of the organization.
Hence it is advisable to have a regular production cycle and store the goods for the appropriate distribution.
Storage of goods can be necessary for an organization to avoid any inconsistency in production.
For Example, The Demand for air conditioners will only be high in the summer. The organization should produce air conditioners throughout the year and keep them in the stocks to reduce the chances of the product being out-of-stock.
The business operates in an uncertain environment.
Organizations maintain adequate amounts of inventory to battle this problem.
It helps the organization to be ready at the right time in the right place. It also prepares the organization for unforeseen circumstances.
For instance, the stock of raw materials is crucial for the sudden rise in the price of raw materials. Inventory of finished goods is necessary to fulfill the sudden outbreak in demand for the product.
Inventory planning helps the organization to have a plan for the future.
Management of resources:
Organizations want to manage their resources as efficiently as possible.
It is necessary to have the whole process in a synchronized way.
When an organization wants to start a new establishment like a factory, they want to open a factory near the old establishment.
It saves them a lot on costs and resources.
Methods to reduce cost:
The best way to reduce the price of the product is by reducing the cost of that product. The organization should look for ways to reduce the cost.
Fixed Cost
Fixed cost is the cost that does not change with the change in other factors like production. An organization can’t do much about this cost as it is fixed. In case of rent of the premises, it is not variably possible to reallocate the establishment.
For Example, The rent of the land is a fixed cost. It will not change with the change in other factors.
Variable Cost
Variable cost is the cost that changes with the change in other actors. Organizations can have the benefit from the flexible nature of this cost.
For Example, The cost of Raw materials will change with changes in production.
Semi-Variable Cost
A semi-variable cost is a cost that remains fixed to a certain extent, and then it changes with the change in other factors.
For Example, The electricity bill of the premises will be fixed to a certain extent, and then it will be aligned with the level of consumption.
