Market potential forecasts
1 Definition of Customers
First of all, we define the potential customers of our company. In the first few years, we would focus on rich people who can accept the new ideas easily. With the growth of our company, we will spread target customers to the entire pets’ owners. According to our market research, most Macao pet owners are willing to hold funeral for their pets and they are also economic affordable. Thus these people would become our potential customers.
2 Model Specification - Multiplicative Model
In the multiplicative model, we calculate the industry sales based on internal environment of Macao. Our intuition is that sales figure is the product of price and quantity. Variable description is elaborated in Table 1
Sk=Pk*Qk= i=1m[j=1nPij*PPPadj. Ei*Weighti]6.35* PPPadj. EM * PetNumk*Dk*Sk (k≥2011)
Dk=PetNumRk-1-PetNumRk+PetNumNk-NetPetNumDkPetNumk (2004≤k≤2010)
3 Sales Forecasts
3.1 Introduction
This part constitutes the core of our module. Macao data forecasts are shown firstly followed by the prediction result of two models. The limitation of the models and comparisons are addressed at last.
3.2 Macao Data Forecasts
3.2.1 Time-Series Forecast Model
We forecast the future pet population in Macao, which is related to the number of potential customers, and apply them into our models.
To choose a proper forecasting model, we firstly apply 4 different models to forecast the number of pets since 2003 and then compare actual values with what we have estimated through various errors. After that, the one with the smallest errors is selected as the forecasting model.
There are 4 alternative models. The first one applies the naive method, which simply uses the value from the previous quarter as a prediction. The second one is the moving average method. We use all the possible combinations of term numbers ranging from 2 to 4 to make the prediction. The third model utilizes the exponential smoothing method. We...
