Analyze the methods for demand forecasting that are mentioned in the case. How would you choose to estimate the demand for Muscle- RDX for the next five years?

Demand forecasting

Both Singh and Jain were confident that sales of Muscle-RDX Would quickly take off once health coaches and high endurance athletes Understood the value proposition of the new supplement. Singh expected Jain to use his experience with past product launches, along with the marketing research conducted by Strength Pharma, to provide guidance on expected unit volumes for Muscles RDX in the first five years of sales.

Jain Decided to project demand using three different approaches, Which were based on varying assumptions of how potential users would respond to muscle RDX. The first approach forecasted demand by looking at the number of athletes in India and narrowing the group of athletes who participated in high endurance sports ( 37% of all athletes, as per the Strength Pharma study). He felt this pool should be narrowed to focus on the 25% of athletes who were comfortable with sports supplements. Jain's Experience had taught him that muscle RDX was likely to capture 15% of these consumers in the first year, with 8% growth per year. Also, Test trials found that at least 72% of first time users would purchase a second tub, And 55% of First time users would continue purchasing muscle RDX for a year.

In his second approach, Jain developed a more aggressive forecast using the results from these strength pharma survey that specifically addressed consumer interest in a whey protein based supplement for high endurance sports. Again as a starting point, Jain choose the number of high endurance sport athletes in India, but he concentrated the data point on the assumption that 18% of the respondents were ready to switch immediately to muscle RDX he believed that the earlier developed penetration guidelines (which Increased by 8% per year) And the 72%/ 55% model for repeat purchases would also apply.

In his third approach to forecasting, Jain focused on the ideal target consumer: athletes competing in high endurance sports and residing in urban India (all runners in tier one and two cities and 60% of all cyclists In India), older than 18 years of age, and with no major ilillness. Strength Pharma expected a higher penetration by muscle RDX in this ideal target group than in the overall athlete population. Jain estimated that muscle RDX would capture 25% of this target market in the first year, with an 8% increase in shares with each year. He felt the 72 percent/55 percent model for repeat purchase would also apply.

Jain knew that his pricing and packaging decisions would have a direct impact on sales forecasts. The different pieces of information began to reveal a broad overview of his strategy of muscle RDX, and Jain wanted to carefully analyze each piece of information to provide the best recommendation to Singh.

Conclusion

Jain sat at his desk, surrounded by all notes and data he had managed to collect, knowing that he needed to make several critical decisions before Muscle-RDX was launched. First, he needed to decide on the optimal Product size. Further, he needed to decide which pricing model to recommend. He had worked out three modelsbut he still needed to assess the impact on profitability of each one before making a recommendation. Toaccomplish this task Jain first needed to establish the initial demand forecast for the product in its first five years an insured at the pricing recommendation where the company's standard for return on investment.