Market Forecasting in Real Cases
My experience with micro-economics and business dynamics was triggered by the work of Jay Forrester on Industrial Dynamics, which took advantage of experience and knowledge in dynamic systems behaviour, derived from engineering work. It was applied to problems or market behaviour, looking at the growth of markets and the corresponding effect on a corporation participating in them.
In some cases the real means of influencing the customers wasn't always apparent, nor, perhaps, the persistent effects of brand loyalty or the effects of product lifetime and replacement choices. Such effects could be incorporated in dynamic models and the effects checked against previous experience to merge a common sense understanding with an engineering approach to making models internally consistent and quantified. Then, given some confidence that the key processes had been identified, we could move on to making forecasts.
A simple example was a projection of demand for retail paint. Instead of taking recent history and making a statistical extrapolation, or a marketing manager's optimistic forecasts, we looked at the surface areas to be painted (housing stock) and the lifetimes of paints on walls to make a projection for the market. It was good enough for resource and capital planning for a decade.
Example Applicationsthe growth of the UK motor industry while it was still in a
post WWII transient state,
the behaviour of a market for ethical pharmaceutical
the long term development of the retail wallcoverings (paint, wall paper etc) market,
the demographic driving mechanism for a housing market over a
twenty year period,
the value of advertising in a TV driven retail market
corporate cash flow projections and the strategic implications of
project approval and success,
the policy for allocating resources to either research or to development in a science
Investigating the effect of business growth on career prospects for established employees and new recriuts.
Underlying common theme
In each of these applications the key was being able to describe the components of
behaviour in mathematical terms and synthesise a model of the whole system to see how it
Working with Clients
In developing and exploiting these micro-economic models and market analyses, a necessary step in the process is making sure the client, the owner of the problem, the decision maker is actively involved so that the model becomes a organized, internally consistent statement of his or her understanding of the interplay of forces in the market or business sector.
That alone is not sufficient, but the next step of being able to use the model comes from 'playing' with it to get the answers to "what if?" questions. So, we have produced models that can give graphical results or generate business accounts, whatever the client is comfortable with. We can use powerful Mathematical tools but the client need not be concerned with that aspect. McCann's experience in interacting with clients at all levels and in all business functions will make the interaction easy.
TimeScales and Complexity
Dr Mike McCann is a Life-Member of the IEEE, a Fellow of the IET and a Chartered Engineer and a life member of SigmaXi but as well as the engineering and science background that provides the underpinning analytical skill, he has held planning management and operational research positions in industry (Fortune 500).
My experience with problems over these time scales is that people rarely expand their time horizons far enough to see the whole picture. Even if they try, they tend to miss the complexity created by interaction effects and think more in terms of extrapolating, sometimes with statistical models, from the recent past. My
(MJMcC) observation is that the demographics and the compelling force of reality can be quantified to make a big improvement in perception. You only have to
contact me to get help!
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|Invitation. McCann can help if you have a
design or operational problem that needs some technical support that is outside your
team's experience, some quantitative assessment of what is really the cause of the
difficulties, some design alternatives or just a fresh look by an intelligent
If you have a problem with the behaviour of a market sector, plant, process or item of
equipment and would like to get a quantitative handle on it to improve yield or optimise
performance, then contact me.
I'm always ready to give a little time
to discuss a new puzzle, in confidence,
of course. We'll only worry about fees
when there is some defined work. I can be flexible
about how I work with you.
Chadds Ford PA
T: 1 302 654-2953
M: 1 302 377-1508 (Cell)