Qualitative forecasting is a forecasting technique used by businesses when attempting to understand future market trends. It is a subjective, non-numerical method of forecasting, based on expert opinion and qualitative data, rather than quantitative data. The aim of qualitative forecasting is to investigate the potential changes in a market from an experienced and knowledgeable point of view.
Qualitative forecasting can provide a valuable perspective to business decisions, particularly in areas where data is limited, or where home-grown solutions are required. For instance, in areas such as market research and customer behavior, success may often be determined by understanding trends, customer attitude and preferences, or emerging market opportunities, which are areas not necessarily captured by quantitative research.
Qualitative forecasting is used in a number of situations, including the development of brand positioning, market entry strategies, product launch, and the design of customer satisfaction surveys. It is also used to provide an insight into customer beliefs and attitudes, to identify customer trends, and to gain an insight into customer needs and expectations.
The general guidelines for effective qualitative forecasting include:
• Identifying the right sources and stakeholders to consult, as well as the range of techniques they will use.
• Establishing a timeline, deciding how and when to collect information and make assumptions.
• Ensuring data is gathered from reliable sources, and in-line with regulatory requirements.
• Maintaining accurate data records and allowing for valid challenges and feedback from stakeholders.
• Checking your assumptions and sources by cross-referencing other market and customer data.
Become a Sales & Marketing Rainmaker
Learn valuable skills to win more customers, grow your business, and increase your profits.
• Taking into account any potential new developments or opportunities that might affect your forecasts.
The best practices for qualitative forecasting include:
• First, take time to understand the market and stakeholders. This includes clearly defining your objectives and goals, understanding the motivations of stakeholders, and determining what other insights and data you will need to make an informed decision.
• Next, identify the right sources of data. Make sure you have access to relevant industry information and knowledge, and that it is of sufficient quality.
• Next, determine the techniques you will use to collect and analyse data. This includes conducting interviews and focus groups, surveying customers, and researching trends.
• Finally, design a timeline and plan. Consider how and when you will gather information, when you will conduct surveys and interviews, and when you will review and update forecasts.
It is also important to consider the potential limitations of qualitative forecasting. Qualitative data is often subjective and difficult to quantify, so it may be difficult to weigh the relative importance of information or make comparisons with other sources of data. Qualitative forecasting can be time consuming and expensive, and it can also be difficult to capture information from hard-to-reach customers, or to include ‘unknown’ trends or changes.
Finally, it is important to consider the potential ethical issues associated with qualitative forecasting. Stakeholder privacy and information security must be considered and adhered to, and customers must be consulted in a respectful manner.