Managers’ Practice about Demand Estimation and Demand Forecasting in Pakistan: An Analysis

Abstract

The article is about estimating the demand of Medicam Toothpaste by viewing the effect of various variables like price of Medicam toothpaste, price of Shield toothbrush, price of Colgate toothpaste, advertisement and total revenue. The methodology used is multiple regression analysis using Ordinary least Square method applied on time series quarterly data. The results of this research show that coefficient of price of Medicam and the price of shield toothbrush have negative influence on demand of Medicam. The coefficient of price of Colgate toothpaste has a positive value. Similarly advertisement has direct relation with demand. Total revenue has also direct relation with demand of product. Price elasticity of demand is -0.15, cross price elasticity of demand w. r. t price of Colgate is 0.01, and w. r. t price of shield tooth paste is -0.05, advertisement elasticity of demand is 0.07 and total sales elasticity of demand is 0.02. The forecasting results show that the demand will increase in the 1^st quarter of 2013 up to 48181.53 units.

Keywords: Demand estimation, Demand Forecasting, Elasticities of demand, Exponential Smoothing, Econometric Methods, Quarterly data.