Question

Let's say you work for a company that makes prepared breakfast cereals like corn flakes. Your company is planning to introduce a new hot breakfast product made from whole grains that would require some minimal preparation by the consumer. This would be a completely new product for the company.
(A) How would you propose forecasting initial demand for this product?

Answer 1

Answer:

The best step to take in forecasting initial demand is to use sales volumes of existing products to forecast demand for a new one.

This method is particularly useful since new product is a variation on an existing one involving, for example a new hot breakfast product made from whole grains that would require some minimal preparation by the consumer

Since it is a new product in the line of breakfast cereals, there variations can come in the form of a different color, size or flavor to increase marginal utitlity bearing in mind that the market segment is still the same.

Based on this forecast, you can make sales projections.