demand forecasting

The Downward Spiral of American Beer

Posted on by f1233pmazurek

 

As many people know Annheuser-Busch merged with a Brazilian company named In-BEV, now known as AB InBev and people are starting to question the beer industry. AB InBev now controls 48% of the beer market and 68% in Brazil alone. So what is the issue? The distinct taste of American beer is now being produced with many foreign beers. Since the merger Ab InBev has moved production of many beer plants to right here in the U.S. That is good for workers here in the states but not necessarily for the avid Budweiser drinkers. Many people have complained that the beers are becoming more bland and not as tasty. In the article a Beck drinker for 25 years went and bought a 12 pack and said the beer just didn’t taste the same. After further inspection the German beer “Becks” was now manufactured in St. Louis, Mo. AB InBev has seen beer sales drop for many of their beers but they are still profiting as a company. The new manager of the firm, Brito, is making all sorts of cut backs in the company and as well as in the production of Budweiser. Budweiser has always boasted about using whole grains of rice in their beer and now the quality in the rice is the most important part and it doesn’t matter if it is whole or broken grains. He is also cutting off suppliers which have been used for over 25 years. These cutbacks are shutting down businesses and changing the beer industry as well as the beer itself. I understand making cuts to make a profit but is it truly ok to modify the beer which has been loved by the public for decades?

I do not believe it is ok, unless the public is made aware of the changes taking place in many of these breweries. If the customers continue to buy Ab InBev’s products and taste a difference should they not be informed?  These modifications may not be noticeable to the once in awhile drinker… but it definitely will be to the loyal consumers of Budweiser. Modifications to this beer will also mean modifications to other American beers will occur as well, eventually altering the American beer market forever. Brito, the managing director of the company, will not comment on any of the changes and refuses to give any interviews.

To add insult to injury Brito has also raised the price of Budweiser and Bud Light, seeing how they are the most popular American beers right now. The price increase has slowed sales in 2011 by 3% and Bud slipped by 13%. Many researchers said it is not unconstitutional to make a profit in any company and Brito has done a great job of doing that, but it maybe un-american to modify a beer that has been iconic in the American culture for years now.

Are you Willing to Play “FarmVille”? How About “FarmVille 2”?

Posted on by f1231mburton

In 2009 Zynga Inc created the extremely popular online game “FarmVille” that is exclusively played through Facebook.  It launched in about five week with only a 10-person team.  At its peak “FarmVille” had roughly 32 million users per day but has dropped all the way to 2.8 million users per day.  For the last two years Zynga has been pushing to reinvent themselves and regain the market of gamers they once had.  In September 2012 they came out with “FarmVille 2.”  To make sure that “FarmVille 2” was a complete success Zynga hired 50 works, including an executive from videogame maker Electronic Arts Inc, which help to create their new 3-D graphics.

Zynga has a lot riding on the success of “FarmVille 2” and has already warned investors that there will be losses next quarter’s financial outlook.  Along with delays of production on upcoming game launches.  They are trying hard to recapture their initial buzz by spending $171 million on researcher and development of their product.  By investing more money, they hope that users will be more enticed to buy more virtual goods.   Since their “FarmVille 2” launch in late September 2012 they only had 8.2 million users per days, which is far from what they had expected.

Zynga competes on a differentiation approach, by making their games free they have to make users want to play their game.  For instance Zynga create a unique soundtrack to their game “CastleVille” and also revamping the image to “FarmVille” gave Zynga their competitive edge.  Zynga also witnessed a quick product life cycle with “FarmVille”, which lasted about two years.  When  “FarmVille” reached it’s maturity in 2010 it had over 32 million users and had less focus on changes of the game.  During its decline many other games distracted gamers with new ways to win prizes and to get ahead in the game.  With the new “FarmVille 2” it is still in its introduction but Zynga had planned a forecast that showed more potential daily players than it currently has.

Zynga is fighting an uphill battle trying to regain is popularity.  But it might take more than changing the image and making incentives for users to continue playing and to get old users back.

 

http://online.wsj.com/article/SB10000872396390444657804578053171742809466.html?mod=WSJ_business_LeftSecondHighlights

 

Knowing the Future, for the Stability of Present

Posted on by f1222sghatila

Knowing the Future, for the Stability of Present

Everything in our daily lives requires a form of forecasting for us to be able to predict what to wear, consume, and safety. Hurricane Sandy, which is forecasted to hit the East Coast, helps people with their safety and precautions we  have to take to secure their lives, family, and home. Many people are planning to evacuate because of the information given about the hurricane in advance. We depend on these types of information for our health and safety. Depending on whether the weather channel says if it will rain or snow, we all dress according to that. Due to the current weather situation, many fliers have to consider their delay and canceling of flights. This delays a lot of business process and other situations and airlines have to consider this when rescheduling flights for the process to run again. Forecasting is a major aspect of our life and the information is depended upon for the present to be as smooth as possible.

Most retailers have already forecasted for the sales of fourth quarter, holiday season. They want to produce as much as the demand is suggested for, their revenue depends upon it. Forecasting is a major  aspect of any job. It tells you how many to hire to produce a certain amount, how much of the product will be sold, and this information is critical because competitors thrive on an advantage to do better than you do. Halloween season creates a high demand for candy, which if forecasting did not occur either we would not have enough candy or surplus or either situations have negative consequences on the revenue and growth of the company.

Apple is on top of the technology world right now. Their products are sold and back ordered for months because their demand is incredible. Currently IPad mini in white are completely sold out and even though black ones are still available, their inventory does not have enough for those who demand it. They are losing on business for those that could have been sold if availability was an option. Having a demand forecasted accurately would help the business grow and keep consumers happy. Loyal customers will always stay as long as possible but those who are indecisive about a brand will potentially lose a customer if forecasting is not done accurately.

In what other ways do we use forecasting for our daily lives?

http://www.chicagotribune.com/business/breaking/chi-airlines-ask-fliers-to-reschedule-due-to-big-storm-20121026,0,3996884.story

http://www.chicagotribune.com/business/breaking/la-fi-tn-apple-white-ipad-mini-20121026,0,4979541.story

Netflix “Forecasting Error” Aftermath

Posted on by f1221tbarbiaux

 

Netflix has been on a bumpy road due to managerial decisions that led some customers very unhappy. Around a year ago, Netflix decided to split up into two companies that separated it’s DVD rentals and instant online viewing of movies and television shows. The rebranding, along with pricing changes and some pretty bad PR, had many customers drop their Netflix subscription. There was definitely a need for change, so the company would not go under and could return to profits. This is where the importance of forecasting comes into play.

 

Netflix made some changes and recently released their third quarter earnings to the public. After the second quarter, Netflix returned to profitability and again in the third quarter. There was one issue that CEO Reed Hastings addressed in his third quarter investor call. He stated that the growth was “within the range of guidance from a year ago, although not from Q1.” He made it clear that it was a forecasting error instead of a stunt in overall growth. Netflix had to lower its own forecast by two million subscribers, even though it grew by five million subscribers this year.

 

I feel that two million is a big number to miss by an incorrect forecast. Why do you think that they missed this by this big of a number? Do you think Hastings is just trying to make light of the situation by saying that the forecast error has not really affected them? Is he doing this to just reassure his company is moving forward and continuing to grow? Will the forecast error affect the company in the future?

 

Hastings is optimistic about the future of Netflix due to strong growth abroad with recent expansions to Europe and South America. Also, Netflix is trying to compete with Amazon, Hulu, and HBO by the high value of exclusive content deals that Netflix has already and is still acquiring. Hastings has made it clear that “the outlook (for the company) has not changed” even after the disaster of splitting up the company.

 

http://techcrunch.com/2012/10/23/netflix-ceo-reed-hastings-subscription-growth-miss-was-a-forcasting-error-long-term-outlook-still-positive/

Should we forecast?

Posted on by f1224jwu

hoiliday

The importance of forecasting is really significant in improving the business. From our recent classes, I have learned how forecasting functions in business. It plays a critical role in meeting the needs in the consumers. Forecasting helps focus on what the consumer needs in the product or service, which is important for making product decisions and future planning. It also predicts the quantity needed to prepare beforehand to satisfy the consumers’ demands.

I read an article called “Holiday sales forecast to rise 4.1 percent this year”. This article is about the forecasting and statistics for the holiday months, November through December of 2012. The forecasting shows that people are less likely to splurge this year due the recovery of economic recession. Shoppers are worried about the rise of prices of goods and being unable to afford it, thus the decrease of splurging. By forecasting, retailers understand the needs of their consumers. Retailers made a lot of discounts during these months to encourage their consumers to shop. Forecasting also provides information how many consumers there will be. This information is provided with the prediction of the growth trend. It shows that it is significantly lower compared to the previous years. This information provides the retailers how much products they need in order to meet the demand.

How important do you think forecasting is in business?
Do you think it is necessary?

Sources
Article: Holiday sales forecast to rise 4.1 percent this year

Inventory equals cash?

Posted on by f1234fshamoun

Just few weeks ago I didn’t know the importance of forecasting until recently I learned how important it is to forecast in any business. I never thought of inventory as being cash I just thought of it as a bunch of stuff, and materials. I found this article in Forbes magazine that talks about how inventory is your cash. It discuses how you are supposed to treat your inventory, and how you are supposed to track all your inventory so that you can gain more cash then losing cash and better business that will make your consumers happy.

Having a business is not just about buying and selling you have to pay attention to what’s coming in and what’s going out and in order to do that you have to track everything. My family has a business and when they are doing their orders they do forecast everything. First time I saw them I didn’t know what they were doing until recently when I learned about it more. It’s not about having a lot of inventory in your business you have to see how much was sold, how much you have in hands, and how much you think will sell that’s what you bring in. By tracking and forecasting your inventory it will save you a lot of money because you don’t extra inventory sitting in stock that will not sell. The bigger the business you have the harder it gets to keep track of your inventory so that’s why everything has to be monitored so save you money.

As a business owner you might think you are keeping costs down, but without using the right steps it will get very difficult so you must track the entire inventory to make the business grow. For example, if you own a business that sells fresh products you want to make sure that you get new products in everyday you don’t want to order to much and it will stay there consumers won’t be interested in shopping there anymore because they don’t see fresh products. By forecasting and mentoring everything that’s coming in and going out will help you get fresh products everyday and will help your sells grow and be a successful business. This will also help you with product life cycle if a product was selling a lot and then it slows down you don’t want to keep ordering it for your inventory and it won’t sell. There are many systems to help a businessperson to track and forecast their products. There are special computers that will help just putting the information into the system and it will automatically tell you everything that you have and need in your inventory.

What do you think about inventory equaling cash?  Do you think forecasting will help in having better successful business?

 

Source: http://www.forbes.com/sites/davidkwilliams/2012/10/13/your-inventory-is-your-cash-handle-with-care/

your-inventory-is-your-cash-handle-with-care

 

 

 

 

Cash Strap? Need a Job this Holiday Season?

Posted on by f1224hpham

With the holiday season approaching fast, many major retailers are opening up more jobs in preparation for the high demand of the holidays. Experts estimated about 700,000 new, temporary jobs for this year, which is a slight increase from last year. As the economy is slowly moving out of the recession, many American families are paying back their debts, which give them the extra cash to spend this year. Hence, there is a great outlook for this holiday season for those of you who are looking for a little more income or just taking advantage of the employee discount that most of these retailers offer for their employees.

Looking at previous years numbers, most of these retailers are retaining their seasonal workers well over the holiday season. These temporary, seasonal jobs are turned into full-time positions, which for most workers are a good thing if they are looking for a permanent job. I have started seeing a lot of companies doing this nowadays. Rather than hiring full-time workers right from the start, companies would look into their pool of temporary workers first before hiring outside workers for any new positions. I’ve had a taste of this through the internships I have had done in the past. Most of the firms that I want to work for usually hire from their pools of interns and offer little to no position to those who have not worked an internship at their firm.

We’ve talked about forecasting in class, and this article ties in with this topic. With the increase in demand for goods and services this holiday season, major retailers are hiring more workers to meet this demand. Some even go as far as to open temporary stores, i.e. Toys “R” Us, in anticipation for the busy holiday rush. I think that this is a good boost for the economy as it may opens more, new jobs in the future for some people. Also, for companies, this is a smart move because they do not have to deal with making enough revenue to cover for the fix costs that come with permanent stores throughout the year. They can just rent a store for three to four months just in time for the holiday demand.

Questions to consider: Are you looking for a job? Would you be interested in becoming a seasonal worker? How are these companies handling their forecasts? What are the pro and cons of the increase in jobs during the holiday season?

 

http://www.forbes.com/sites/meghancasserly/2012/10/02/700000-new-retail-jobs-for-holiday-2012-heres-whos-hiring/

Shop Like It’s 1999!

Posted on by f1223jkundrat

In a time when pennies count, retailers are looking for any competitive advantage they can find. One way which is starting to make a comeback is the layaway program. By allowing customers the opportunity to put items on hold for a set number of weeks, it gives the consumer who may not be able to afford a purchase right now the opportunity to lock in their price. These programs have several different structures, some charge upfront fees at the beginning of the layaway period, and additionally some of which accrue interest charges.

This philosophy is nothing new in the retail world, but has seen a renaissance over the past few years, with many large retailers such as Sears, Kmart, and Toys ‘R Us pushing the programs. By offering layaway, retailers hope to boost early sales and beat their forecasts for the holiday season. Layaway does, however, have its downsides for companies since many have waived their service fees if consumers do not follow through with their purchase. This leaves merchandisers holding onto the extra inventory. Also with this new push to increase sales, retailers are adding many new items eligible for layaway. This move could prove to be both a positive and a negative. While on one hand it will bring in more shoppers to put things on layaway. If enough consumers do not follow through on their contracts and the stores took precious items off the sales floor, the results could prove costly.

By offering layaway financing through the stores themselves, it gives consumers who do not have, or might not want to use their credit cards. By allowing these consumers who might not have purchased the item otherwise to purchase from your company, it opens your profit potential that much more. Because it entails more planning on behalf of the merchandising crew, and all of the other aspects listed above, the decision on whether the layaway program is beneficial to each individual company is something that is up for debate.

Question: If you had a retail company, do you believe implementing a layaway program would be a good idea? What are some other benefits and consequences in addition to the ones mentioned that might come about due to a layaway program?

http://www.cnbc.com/id/49302750

http://chainstoreage.com/article/sears-kmart-jump-layaway-bandwagon-waiving-fees

 

No more DrawSomething? No More Farmville?

Posted on by f1233bnikolova

http://money.cnn.com/2012/10/04/technology/social/zynga-outlook/index.htmlWhat do you think ZYNGA could’ve done differently to remain a successful company?

 

In an article from CNN, Julianne Pepitone shares some breaking news about the dynamic gaming company, Zynga, who hit the jackpot a couple years ago with their popular game, FarmVille, which they originally offered solely on Facebook. When first starting out the company flourished and became one of the most profitable gaming companies in America. Their strategy for competitive advantage in their industry is Differentiation, which offers better games, connected to a social media website that everyone in the world uses, and best of all is free of charge. Recently however, the company has gone through multiple financial and ethical struggles and has been working hard to hold on to their “loyal” users and to increase their stock share price. Unfortunately, because of CEO and founder Mark Pincus’s irrational decisions, the company is slowly burying themselves in a hole that they must crawl out of before they are in too deep.

The article starts off by sharing a couple of forecasts that the company has publicly stated, many of which are gloomy and downgraded. By blaming most of its gloomy 2012 forecast on “reduced expectations for certain web games and a delays on launching several new games,” Zynga has given nothing but excuses to its angry investors and things getting worse. With Zynga’s shares  down 75% in afternoon trading on Friday, things are pretty bad

In class, we learned about forecasting and the significance of it in a successful company. Zynga’s purchase of a company called OMGPOP, which released its hit “Draw Something” early in March. If Zynga had used some kind of a demand forecast, they could’ve predicted sales of the existing product (Farmville) and prevented all the money that was lost through the buy out of the new product, “Draw Something”  Although forecasting is seldom perfect, it is better to forecast and to have some kind of idea about what you’re getting your company into, then walking into something new completely blind.

Also, Zynga is infamous for buying out its competitors when they are feeling threatened. This has usually worked for them and is one of the main factors as to why they are so successful but also why a lot of people dislike them/feel that they are unethical. Unfortunately, Zynga’s CEO decided to buy the company for the sole purpose of Draw Something’s popularity and didn’t use any demand forecasts to predict future sales of the game. Draw Something unfortunately turned out to be a “short lived fad” and has cost Zynga lots and of lots money in the past couple of months. When Pincus was asked if he thought that he paid too much for OMGPOP considering its unpopularity, he calmed replied by saying”I’d say it’s too early to call it after one quarter.” Unfortunately, this nonchalant attitude will get the company going nowhere and will further decrease its profitability.

 

What do you believe was ZYNGA’s biggest mistake?

Would you invest in ZYNGA?

Pump the Brakes before Crashing into a Bankrupt US Subsidiary

Posted on by f1223aperry

 

The American auto industry has had more than its fair share of ups and downs in recent years, with General Motors particularly attracting public attention.  Companies targeting domestic vehicle sales land on two sides of the market share spectrum: the high end or the low end.  Considering that American car sales boast growth unseen in other international regions, this market seems like an ideal target.  However, gaining ground against sizeable and established competitors is no small feat and it shows that not all companies follow the old adage of not throwing good money after bad.   These businesses could be grappling with a number of obstacles, but above all, they cannot contend with the effects of the open global market.  A recent article in MarketWatch urges these floundering automakers to put an end to the delusion and exit the US.

Specifically mentioned in the article are Mitsubishi, Volvo, and American Suzuki.  It is not that these manufacturers, in their entirety, are poorly operated or produce subpar vehicles; the problem is that they will not survive as guppies in an industry of sharks.  To sell cars, a company needs a number of things: powerful marketing, public relations, an extensive dealer network, and most importantly, a well designed product.  The aforementioned brands don’t have these things and, without continued and substantial financial support from a parent, will try to tread water until they eventually drown.  Volvo is targeting a line already dominated by BMW, Lexus, and Mercedes, while Mitsubishi missed the move into the American market decades ago when its Japanese competitors started the initiative.

So when is it time to put an end to the optimistic, yet delusional, forecasts and bottomless pits of marketing and PR budgets?

 

Link to article: http://www.marketwatch.com/story/car-makers-that-might-as-well-back-out-of-us-2012-10-06?pagenumber=1