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Sales Forecasts Built on Quantifiable Driver ImpactsThe Problem: Annual Planning Process ForecastsAn appliance manufacturer needed an enhanced understanding of the factors driving white goods sales across markets. Furthermore, the company needed to use this understanding of the driving factors to generate reliable forecasts of white goods sales, segmented by product categories for use in its annual planning process. Our Approach: Historical Analysis and Model Building Global Insight conducted a Business Drivers Workshop to identify factors the client believed were driving sales across markets. The client suggested a strong relationship between white goods sales and investment in residential new construction, turnover of existing homes, and renovation activity. Our statistical analysis of possible driving factors identified a combination of the typical consumer spending determinants (real disposable income, product prices, consumer confidence, and product attributes) and housing construction and renovation determinants (household formation, interest rates, and increases in home prices). The structural relationships between sales and the driving factors were identified through historical regression analysis and incorporated into a forecasting model. The Answer: Forecasts and the Rationale Behind the Forecasts Our client now has a tool to generate forecasts for white goods sales across markets with a high degree of confidence. The structural nature of the forecasting tool provides the client with a better understanding of the factors driving white goods sales, and a clear rationale to present to management to support the forecasts.  |
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