Market Modeling and Forecasting
Every company is interested in increasing sales and widening its customer base. However, the ways to achieve these goals are not always evident. For example, in order to choose the most efficient marketing and sales strategy, company specialists have to analyze a great amount of factors in order to be successful. For example, demographics, income and unemployment levels, distinctive product features, actions of competitors, modern technologies development trends, market and customer demands, production capacities, market segmentation, and national characters of potential customers. Furthermore, most of these factors have to be considered dynamically because they change in time. Consequently, the task becomes virtually unsolvable using standard analytical methods. Simulation modeling comes to the rescue because it is able to describe processes “as they are”, and follow situation evolution depending on the various system parameters. With simulation modeling, it is possible to predict market changes for a necessary period of time. Let’s take the cellular communications market as an example. Telecommunication companies have a lot of information available about subscriber preferences depending on age, education, income, and cost of other operators’ services, but this is not enough to make a forecast. They also need to consider: customer group interaction, whether members of his/her family, friends or colleagues are subscribed to competitor telecom operators, which tariff plan is used, market changes, new disruptive technologies, and competitor actions. With simulation modeling, it is possible to take all of these factors into account and make a high quality forecast. The model can also be used in proactive management mode. For example, analyzing competitors’ innovation responses in order to increase competitiveness of the company, as well as its’ products and services. Market modeling aids in solving the following tasks:
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