Qualitative Method:

Test Marketing - It is a method of sales forecasting, wherein the new product is launched in
the selected geographical areas, the representative of the final market, to check the viability
of the product and its demand among the selected group of people. On the basis of such
response, the firm decides whether to commercialize the product on a large scale or not.
Various methods used for consumer-product market testing are:
1. Full-blown-test markets:
 Company select a limited number of medium-sized cities such as (2 to 6 cities) for
promotion campaign.
 Time duration varies from a few months to 1 year, depending on repurchase period of
the new product.
 Survey is conducted to know about consumer attitude, usage & satisfaction towards
the new product.

2. Controlled test marketing:

 Company hires research firms and gets a panel of stores at a given location.
 The task performed by research firm are :
a. Deliver the new product to the panel of stores
b. To arrange promotions at the stores
c. Measures the sales of the new product
d. Interviews sample consumer to get their perceptions on the new product.

3. Simulated test marketing

 In this method, 30-40 consumers or shoppers are selected, based on their brand
familiarity and preferences in a specific product category, such as detergent, cosmetic,
drink product.
 Consumer or shoppers are exposed to commercial or print ads of branded product and
new product without any specific mention.
 Consumers are given money to make purchase any of the items in a store.
 Close observation is maintained to know how many consumers buy the product and
competing products.
 Consumers are interviewed to know about their buying and not-buying intentions.
Satisfaction level if buying and repurchases intentions.

Advantages:
 It helps the firms to test and try the product beforehand.
 It enables the firms to look at the pros and cons of the product at the early stage and
make decisions on whether to continue with the product or drop the product idea very
much before the commercialization.
 Their usefulness for the forecasting the sales of new or modified products.
Dis-Advantages:
 It is a time-consuming process as it is required to be carried out for a long period of
time in order to obtain the reasonable results.
  Due to such a long time gap, the competitors may manipulate the test marketing
process and make the results unreliable.
 There are chances of the wrong selection of the geographical areas that might not
represent the true picture of the whole market.

Quantitative Method:
1. Decomposition Method:
Decomposition is a forecasting technique that separates or decomposes historical data into
different components and uses them to create a forecast that is more accurate than a simple
trend line. The four main breakdown components such as trend, seasonal, cycle and erratic
events By forecasting each component separately before combining them, you can assess the
importance of each and emphasize or discount them according to changing market or
economic conditions.
Dis-Advantages:
 Historical data is explicitly needed.
 Complex statistical methods are required to break down sales data into various
components.

2. Naïve/Ratio Method:
It is a forecasting method, which is based on the assumption that what happened in the
immediate past will continue to happen in the immediate future.
Advantages:
 It is simple to calculate, requires less data and accuracy is good for short term
forecast.
Dis-Advantages:
 It cannot be used for forecasting sales for long-term periods and new products.
 Accuracy of sales forecast would be less, if past sales fluctuate considerably.