What's the hardest part about product launches

7 steps of the new product forecasting process

There are several risks involved in launching a new product as companies attempt to penetrate a market with established lines. To gain a competitive advantage, companies need a plan that outlines the supply chain.

With a new product forecasting process, companies can reference data from similar products in order to optimize product launches, minimize risks and maintain profit margins.

What is forecasting?

Business forecasts relate to the use of software, automated tools and analysis to predict future developments. Modern forecasting software uses machine learning to develop trends from historical and real-time data. Automation tools also create best and worst case scenarios, detect anomalies and help companies anticipate fluctuating market trends.

Business forecasting can be applied to various segments, from customer demand to expense management. This enables companies to improve their business strategies to promote profitability.

For example, demand forecasting software can predict that sales for a particular line of products will decline within the next year. Companies can then adjust their ordering strategies to maintain minimal inventory levels and reduce inventory and warehouse costs to generate a profit.

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7 steps to forecast new

Product forecasting is essential when introducing a new line of products to the market as companies need to be able to anticipate consumer reactions. To begin forecasting a new product, management should follow the first seven steps.

1. Forecast the volume of first-time sales of new products

The first step is the most difficult as new products often have little to no history, making it difficult to collect sales data. Therefore, companies have to reference different data sources in order to estimate the initial sales volume. Managers should start collecting-

  • Consider historical sales data from similar product lines in the same category.
  • Current sales data from competitors who carry similar products.
  • Marketing data from promotions, advertisements and coupons.
  • Forecasts about the possible risk of various sales offers.
  • Product launch date forecasts based on seasonality such as public holidays.


With the above resources, companies can predict demand for new products for the first 12 weeks.

2. Appreciate the cannibalization of the

Appreciating brand-brand cannibalization is the process of creating sub-brands so that the original parent brand can expand its customer base.

This initiative needs to be handled carefully as it requires reallocating resources in the supply chain and adapting the plans of existing products. If not done properly, cannibalization can actually reduce sales of established products, resulting in significant profit losses.

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3. Evaluate raw material suppliers

Companies need to evaluate their suppliers to determine which raw materials are best offered. Sometimes companies need to realign their supply chains to optimize sourcing and product launches. In this case-

  • Changes to the design of the supply chain must be reported to all raw material suppliers for a final check and compliance with the regulations.
  • The introduction of the new material must be documented in the parts list (BOM).
  • Changes in the production line must be outlined before the resources are allocated.
  • The raw material supply capacity and the lead times should be carefully calculated, checked and completed.

4. Assess prefabricated house production capacities

Organizations need to review their manufacturing capacities to determine their total internal capacity for finished products. Otherwise you may find out too late that you do not have enough space to accommodate the production output.

In order to evaluate the manufacturing capacity for finished goods, management should use the

  • Review the production schedule of existing products for both short-term and long-term manufacturing to determine their capacity utilization.
  • New product requirements, setups and changes to project the percentage of capacity utilization for the product launch.
  • Product tests are carried out as soon as the sample raw materials arrive to determine manufacturing and equipment needs.
  • Requirements for packaging, storage and transport.

5. Determine the initial production volume

As a rule, the initial production volume is between 65 and 70% of the original sales volume. However, this number depends on the type of inventory. For example, products with a short shelf life have a reduced percentage.

Warehouses must be ready for shipments at least a week before the official start date to ensure they meet maximum customer demand. Managers and quality teams should be ready to resolve any problems that may arise immediately.

6. Determine the Initial Production Distribution

Companies often follow the regional distribution pattern of similar product lines to develop their initial production distribution plan. The final plan should also include input from the regional sales team and loyal customers.

Proper sales planning can minimize storage costs and time consumption throughout the supply chain and maintain the profit margin of the product. Many transportation managers keep most of the inventory in the regional warehouse until there is demand for distribution between retailers. By assigning products as needed, companies can reduce unnecessary expenses.

7. Monitor sales and

Customer Feedback The first month after a product launch is critical and needs to be closely monitored. By collecting feedback from loyal customers, vendors and retailers, organizations can mitigate emerging threats.

Companies should also integrate point-of-sale (POS) data with other supply chain management systems to analyze product activity as it travels through the sales funnel. By measuring customer demand, companies can manage backlogs and procurement to maintain sales.