Constant reminders of how difficult the planning and forecasting of product demand can be are ever present in today’s challenging economy. While readers can often read and view webcasts, white papers and blogs focusing specifically on challenges presented in the consumer products industry, there are many unique challenges in other industries as well. I provided some summarized take-aways outlined in a good article on this subject in a recent post.
Within the high tech and consumer electronics industry, recent quantitative market updates bring forth the true picture of these challenges. According to press release from market researcher IDC, global shipments of personal computers demonstrated their first decline since 2002, declining 0.4 percent in the October-December quarter, and sinking 3.5 percent in the U.S. IDC indicated an overall 10.5 percent increase in global unit demand for PC’s in 2008. “Despite market optimism early in the fourth quarter, the pace at which the economic environment unraveled and the extent to which PC purchases were affected was faster than anticipated.” stated IDC in its opening statement, a clear indicator of how sudden changes continue to occur in our current worldwide economy.
In contrast, market researcher Gartner Inc., obviously utilizing different market sizing assumptions, indicated there was a 1.1 percent increase in global quarterly shipments and a 10.1 percent decline in U.S. shipments. Beyond the obvious differences in the implications of these market performance numbers, planners will also need to dive into the details in order to get a true picture of what’s going on in the market, and more importantly, how to effectively plan for product demand in the coming months. In fact, reported global shipments for each of the PC providers indicate highly contrasting market performance, ranging from a 25.3 percent increase in shipments for Acer, vs. a 6.3 percent decline for Dell. Thus, while overall market demand may be starting to decline, existing or future demand is more related to specific products that are being positively accepted by consumers or rapidly changing demand patterns that are specific to certain geographies.
Meanwhile, the video game business continued to be a bright spot. Even though growth slowed somewhat in December, U.S. retail sales of video game consoles, games and accessories amounted to nearly $18 billion in sales, with monthly sales surpassing the $5 billion mark for the first time. Here again, specific brands and certain game titles demonstrated far different pictures of product demand.
These updates provide more reminders of the existence of high demand volatility in multiple industry settings, as well as the need for companies to be more demand vs. forecast-driven in overall planning. Regardless in what industry you reside, and especially in high-tech, planning and forecasting of demand in this unprecedented economy requires both the ability to dive much deeper into the numbers to ascertain demand patterns for specific products and/or features, as well as the ability to quickly sense at the most detailed level, any changes in demand, as they occur. The numbers can also uncover potential new market opportunities for your company.
There is no doubt that sensing specific demand patterns within this economy can no longer be accurately accomplished utilizing general or mere spreadsheet forecasting techniques.
What’s your view? Is your company experiencing this high rate of volatility in product demand?