The world often feels like it is full of unpredictable events and behaviours. Making the right choices in demand forecasting can feel like a game of chance, filled with wildcard variables that can threaten the balance of the equation. However, behavioural psychology and human geography can offer powerful insights. Here’s what you need to know.
Payday… Or Is It?
It is well known that the end of the month – payday – is the time that people tend to splurge. As the date of the next pay cheque nears, people tend to tighten the belt and wait before making purchases. Or, at least, that’s how it used to be. 15.1% of the UK workforce is now self-employed, according to the Office of National Statistics, and this means that 4.8 million people are bouncing between invoices and are as likely to be paid on a random day as a predictable one. Using demand forecasting software can help you gain deep insight into your customer base, and can reveal ebbs and flows in buyer behaviour.
Watch The Weather
A sunny spell can lead to a run on barbeque equipment, whilst thunderstorms can result in a sprouting of umbrellas. However, there is much more to the weather than dictating what activities people engage in. Weather can have a powerful effect on individual and group behaviours. When the sun comes out, inhibitions tend to slip by the wayside as a cheerful holiday mentality takes over. Days of gloom cause people to hunker down, their purchasing brains switched off. Improving demand forecasting accuracy involves being able to read these signs and prepare for the inevitable changes.
Listen To History
Sociologists give it the rather unfortunate term of ‘herd mentality’, but there is no escaping the fact that most humans follow trends. Although forecasting these can be a little unpredictable, there is much more certainty to it than many think. For instance, the current public outcry regarding plastic waste was clearly foreshadowed by the ozone layer drama in the 1980s, and companies that were on the ball could have easily seen that sustainable products would be a good investment. Thankfully, retail demand forecasting software is excellent at noticing behavioural patterns and offering pathways.
Keep An Eye On Politics
Famously, politics are included in Porter’s Five Forces model. If people feel uncertain, nervous, or have good reason to be jittery, their spending habits change. Currency fluctuations are a good indicator of buying habits, but any change can rock the boat. When it comes to improving retail demand forecasting, having an awareness that steps beyond the revolving doors is vital. Political change affects everything, including demand.
Sometimes It’s Personal
From binge eating to impulse buying, human responses to change, major life events, and emotional distress are fairly universal. Everyone has their own coping mechanisms. However, these can seem to spring out of nowhere, and to the demand forecasting manager these trends can seem baffling. Advanced analytics help to un-muddle the picture by identifying shifts in audiences. This takes the hard work out of knowing who to target, and also makes life easier for the consumer by matching them with the right stream of information.
For more information about how to improve demand forecasting accuracy, speak with one of our advisers today.
Image source: Pixabay