4)Test marketing or controlled experimentation:-
Firms resort to test marketing while launching a new product or likely to change the design or model of the existing products. This is also known as controlled experimentation method as the product is likely to be launched in a segmented market to identity its demand potential. The essential prerequisites of test marketing are that the product price, its design, quality, level of advertisement and sales promotion campaign should be equal in promotion to that of what the firm is likely to incur had it been released in the dilatational market. Test marketing should be continued until the repurchase cycle commences. The geographical, economic, sociological and even the demo Topic features of the test marketing region should represent all the features of the national market.
Test marketing can be under taken in a single market or different markets with different features of the product. Test marketing will no doubt be useful method as it ventilates the consumer preferences and facilitates the model or design changes if necessary but at the same time, it is an expensive proposition. The forecasted sales in the test marketing area should not be taken on their face values.
5)End-use or input-output method
The end-use method applies for forecasting the demand for intermediate products. These are products used in the manufacture of some other final goods. The demand for the final product is an indicator of the demand for intermediate product, subject to the availability of the input/output coefficients. Once the demand for the final goods estimated, the demand for the intermediate product can be easily arrived at using the input-output coefficients. The major problem of using this method is that one product is an intermediate product for producing not One commodity but several other commodities as in the case of iron and steel. In such cases. The input-output coefficient in all the uses and the estimated demand for all those products should be available, failing which the demand forecasts become useless.