1. Marketing Essentials
2021
Professor Steven Litt
@StrategySteven
Ready to be a Marketing professional?
The Forecast
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2. Tip:
You don’t need to love to make forecasts.
You do need to appreciate their importance… to you, to the
entire organization, to its stakeholders & customers, etc
Forecasts are that crucial.
What’s riding on an accurate forecast?
The organization’s interdepartmental harmony, the success
of the firm, the sanity of suppliers, the satisfaction of
customers…….. and your job.
©2020 Steven Litt . All rights reserved. May not be scanned, copied, duplicated or posted publicly to a website in a whole or in part.

3. There are many kinds of forecasts
• Big Picture and Detailed (sku level)
• Physical and Financial
• Production and Sales
• Pipeline vs Sustaining/Replenishment
• Base Line versus Incremental
• Imperfect and…. Imperfect!
©2020 Steven Litt . All rights reserved. May not be scanned, copied, duplicated or posted publicly to a website in a whole or in part.

4. Forecasts
Why are forecasts often inaccurate?
• Users/Consumers don’t know real long term benefits, or costs
drawbacks; their predicted Use-Up rate is unreliable
• Market Reaction: Competitors don’t sit still
• Marketing support may not happen or happen as planned
• Weak internal communication (esp Sales-Marketing)
• The forecaster (Marketing staffer) fails to take it seriously enough, or
invest enough time in it
• The forecaster sees no ‘Win’ in doing it well, so they (wrongly)
assume there’s no reason to invest time in it
→ let’s tackle the last issue NOW. If there’s no ‘Win’ in it, is it
still worth investing time in forecasting well?
→ Let’s consider the life of watch-dog…
©2020 Steven Litt . All rights reserved. May not be scanned, copied, duplicated or posted publicly to a website in a whole or in part.

5. Forecasting is a ‘Watch-Dog’ role
©2020 Steven Litt . All rights reserved. May not be scanned, copied, duplicated or posted publicly to a website in a whole or in part.
Forecasts: the obvious ‘Win’…. is to avoid disaster
→ Let’s consider the life of watch-dog…
There’s no ‘Win’ scenario for a watch-dog.
Must they keep investing nonstop effort, despite a No-Win situation?
Yes, they must
imo there actually is a ‘Win’ for a marketer in forecasting, described at end of this deck.

6. Forecasting is not a glorious role
Forecasting usually has a ‘watchdog payoff matrix’
–do it well & you will not be rewarded or recognized; but
do it poorly & you will be noticed for all the wrong reasons
©2020 Steven Litt . All rights reserved. May not be scanned, copied, duplicated or posted publicly to a website in a whole or in part.
Steven’s Note:
Take the task of forecasting very seriously.
You may not be complimented for doing a great job at it
but you will be punished for doing it poorly.
Doing it poorly will also harm your relationships (and that of your
department & your boss) with many other departments.

7. Forecasting
Forecasts help answer 2 critical questions abut a
product or product line:
What info do we convey to other departments?
to flush out conflicts, clarify uncertainties or hurdles, potholes.
What might managing it, look like?
Resource needs by week/month via a carefully constructed forecast
©2021 Steven Litt . All rights reserved. May not be scanned, copied, duplicated or posted publicly to a website in a whole or in part.

8. Forecasting:
What info do we convey to other departments?
→get the forecast volumes correct by month, by
sku & everything runs smoothly.
Get it wrong & there’s company-wide chaos!
©2020 Steven Litt . All rights reserved. May not be scanned, copied, duplicated or posted publicly to a website in a whole or in part.

9. Forecasting:
What impact has a forecast on other departments?
an example of what happens once you hit
‘publish’ on a forecast at a HABA firm for Hair
Styling items:
Purchasing Department .
Manufacturing.
Finance/ Accounting.
Sales
…
©2020 Steven Litt . All rights reserved. May not be scanned, copied, duplicated or posted publicly to a website in a whole or in part.

10. what happens once you hit ‘publish’?
Purchasing Department sends corresponding specific volume
orders/reorders to INGREDIENT suppliers eg for various chemicals,
fragrances, binders, emulsifiers, stabilizing & dispersal agents for
each separate product formula; also submits or revises volume-
specific, deadline specific orders to the cap supplier, bottle supplier,
can supplier, label supplier, corrugate container maker, etc for each
separate stock keeping unit (sku),….
Manufacturing orders shipping pallets, sets aside production line
time to pack the items, adjusts the line maintenance schedule,
creates a production schedule, sends proposed schedule to union &
full timer workers, identifies need for part time staff, notifies Human
Resources Department, schedules training sessions for new staff or
part-timers,….
©2020 Steven Litt . All rights reserved. May not be scanned, copied, duplicated or posted publicly to a website in a whole or in part.
Forecasting:

11. what happens once you hit ‘publish’?
Finance/ Accounting borrows money to finance all Purchasing needs
and upfront deposits, forecasts the plant energy & wage costs in Cash
Flow Models, acquires the updated Labour forecast, factors in
variable Benefits costs, etc,….
Sales revises all Account Management targets, Field rep targets,
Bonus Payout targets, feeds that data into a Sales Force funnel and
automation /tracking program, etc,…
©2020 Steven Litt . All rights reserved. May not be scanned, copied, duplicated or posted publicly to a website in a whole or in part.
Forecasting:

12. Forecasting –many purposes, all stages
Let’s follow the timeline of a new launch to see the roles
forecasting has and the uses it has.
Recall the steps in the New Product Development Process?
©2020 Steven Litt . All rights reserved. May not be scanned, copied, duplicated or posted publicly to a website in a whole or in part.

13. At the ‘Project Evaluation’ stage for a New Product, a forecast assists with:
Forecasts: Project Evaluation, Development
©2020 Steven Litt . All rights reserved. May not be scanned, copied, duplicated or posted publicly to a website in a whole or in part.
At the Development/ Planning stage:
Volume (by date) for a list of suppliers for eg RFP’s
Receive quotes, refine COGS, rerun the forecast
Order ingredients, packaging
Set SMART objectives, Sales targets/quotas & trade funds (per customer)
• Create Optimistic /Pessimistic scenarios
• Check for critical design/worth limits eg
• if not 1 case/store/week, then …shift channel? →Iterate!
• if volume is low, Production impact: eg might subcontract vs make in house
or buying custom manufacturing equipment. →Iterate!
• When can we launch? (lead time, Retail Blackouts)
• When will media start? (ideal: when it’s in store not warehouse! Lead time?)
• Check to see how this coincides with other projects, seasonal workloads,
event-driven workload and priorities.

14. At The Launch Stage: heightened forecast accuracy /attention is needed!
Marketing, Production & Sales must constantly share updates (eg status of
accounts won, # of items listed, etc) and Pipeline figures.
Marketing may need to update Media/ Advertising to synchronize the product-at-
market timing against planned media
Forecasts for a Launch
©2020 Steven Litt . All rights reserved. May not be scanned, copied, duplicated or posted publicly to a website in a whole or in part.
After Launch we still do forecasts; they’re still critical. We have much to learn!
→ Replenishment rate an be difficult to map/estimate/track
→ Use-up rate in homes?
→ Role of Influencers? WOM?
→ Cumulative Media impact (eg how soon will Early Majority buy, if at all?)
→ Distribution/ Channel issues: if promised displays and demo models go up, if
promised location in store & merch support happens
→ Extent to which Competition reacts, blunts the launch, ‘spends up’, etc ….
→ Production Line tradeoffs- eg demand for other item on same production line
Forecasts Post-Launch

15. Forecasting assumptions
o A forecast requires plenty of very specific assumptions that are iterated
o # of chains accepting (and when!)
o # of sku’s accepted (of the new line)
o Cases / store week for A stores, B stores, C stores
o Initial shelf fill** (in A, B and C stores)→ the ‘pipeline’ fill
Also taking into account…
o Regional differences?
o Urban/Suburban/Rural Differences?
o Local competitive strength?
Then also factor in…
o Sales velocity per Chain, A vs B vs C store, on feature vs reg price,…
o Ad impact? WOM Impact? Use-up rate at home (if an FMCG item)
o Trade Execution of planned programs?
o Impact of Competitive Response
©2020 Steven Litt . All rights reserved. May not be scanned, copied, duplicated or posted publicly to a website in a whole or in part.
**Wrt shelf space allocated to a Stock Keeping Unit or ‘sku’: a
retailer/agency inputs item dimensions, number of facings,
shelf height, shelf depth; ‘POG’ or Plan-O-Gram shelf software
shows a visual representation to checks fit for A, B and C stores

16. Forecast Accuracy: Tips
• Do high-low scenarios
[and state all assumptions for each mathematically, after doing lots of Secondary
research including ‘Street’ research]
• Invest time & objectivity to grasp the ‘base level’ –the
underlying ‘status quo’ demand & trend in demand before
any promotions, support activities, customer changes, etc
• Get objective data! Not just Internal/Employee tests, but
External (customer) tests, BASES is you can afford it,…
• Track the math model specifics eg how many cases/store
did a similar product move? How many stores are in this
chain? (more specifically, how many A vs B vs C stores?).
Build the model: revise assumptions, learn, refine, iterate
→ Take this job seriously!
©2020 Steven Litt . All rights reserved. May not be scanned, copied, duplicated or posted publicly to a website in a whole or in part.

17. Forecasting Tiger Traps
Marketers tend to underestimate cannibalization rate, ie we
overestimate the number of purely incremental buyers/users.
Executives (esp those from non-Marketing backgrounds) tend
to underestimate market change; they assume ‘status quo’ =
‘flat’ sales.
Show the Executives that ‘status quo’ and ‘do nothing’ will
lead to lost business, NOT ‘flat’ business!
©2020 Steven Litt . All rights reserved. May not be scanned, copied, duplicated or posted publicly to a website in a whole or in part.

18. The hidden ‘Win’ in Forecasting
Forecasting gets a bad rap as a thankless task, a No-Win duty.
……………….yet…….
It’s also a duty virtually every Marketer must do, for years.
Consider the time as ‘investing’ in skills for a management role:
• It lets you train deputies
• It lets you better critique employees’ forecasts
If you haven’t done it, can you train someone to do it? No.
If you haven’t done it, can you critique it? No.
If you haven’t done it, will employees see through that, think you
unqualified, possibly try to ‘game’ a forecast (mail it in)? Yes.
Do your time in the trenches.
Forecasting isn’t sexy-time… but it is essential-time.
©2020 Steven Litt . All rights reserved. May not be scanned, copied, duplicated or posted publicly to a website in a whole or in part.

19. Recap: Forecasting
Forecasting is an inglorious yet vital role.
Be adept at it; invest effort in it. Not because it’ll get you noticed, but
because it separates you from any peers who do it poorly.
(Climbing the ladder is brutally competitive; you don’t want to be bad
at forecasting. Read the story of 2 men trying to outrun a bear!)
https://www.youtube.com/watch?v=aiXqEeg9pYU
Tips: Forecasting ‘in practice’
• Start early, leave lots of time for this duty.
• Gather facts, historical data, benchmarks; get specifics!
• Build adjustable models; make assumptions easy to change (eg Excel)
• Test the sensitivity; eg do High-Low scenarios
• Track the accuracy- probe what caused inaccuracies; note it & learn
from it.
©2021 Steven Litt . All rights reserved. May not be scanned, copied, duplicated or posted publicly to a website in a whole or in part.

20. SOURCES
• Steven Litt has won new distribution for new items/lines in
Grocery, Drug, Pet, Hardware, Warehouse club and other
channels in USA and Canada---and handled the inglorious
ongoing forecast duties after winning said distribution.
• Steven Litt, StrategySteven.com accessed February 19, 2021
strategysteven.com
• New Products Management, 12th Ed., Crawford and
DiBenedetto McGraw 2021
• Cover photo courtesy of Mandy S Photography
• Thanks to Ron Sweet, Rick Sather, Linda Dyer Carter and many
other patient logistics planner tutors who helped me over many
years.
©2020 Steven Litt . All rights reserved. May not be scanned, copied, duplicated or posted publicly to a website in a whole or in part.