Evolve your marketing with "demand forecasting"! Unlock immeasurable potential beyond advertising and promotions to drive tangible results.

Many companies are tackling the challenge of how to stimulate demand to increase sales of their products and services. To achieve this, they invest marketing costs to drive sales promotions. But what if they could identify the "timing when demand rises" in advance? Knowing this would allow them to precisely determine "where to allocate marketing costs," dramatically improving marketing efficiency.

With the evolution of technology and the accumulation of marketing insights, initiatives are now emerging to "improve overall marketing activities centered on demand forecasting." This time, we will explore the potential of "demand forecasting" for products and services from various angles.

Knowing when demand will increase boosts marketing efficiency

"If we're going to invest marketing costs, we want to invest them at the optimal time" – isn't this the wish of every marketer? As noted in the famous marketing book "Selling Ice to Eskimos: How to Sell Unattractive Products," increasing sales of products or services requires approaching the right target audience at the right time and in the right place. The effort to explore people and timing where demand is most likely to be stimulated, thereby improving acquisition efficiency, is something every company is striving for.

Now, some products and services have clearly defined "peak demand periods." Examples include "chocolate sells well before Valentine's Day" or "toys sell well before Christmas." When seasonal or event timing is fixed like this, demand for specific products inevitably spikes. Companies focus their marketing and promotions during these periods to maximize sales.

However, there are also many products where "we know demand fluctuates due to certain factors, but we don't know when it will happen." Examples include "cold noodles sell when temperatures rise" or "oden sells when temperatures drop." While the phenomenon is predictable, the exact timing cannot be grasped in advance. Consequently, many companies have traditionally responded to these demand fluctuations by treating them as "broad seasonal trends" and building their marketing plans accordingly.

Beyond this, there are numerous other food and consumer goods where demand is influenced by weather and temperature. For these products and services, the challenge was to develop demand forecasting centered on meteorological factors. The solution born from this effort is "Urebi Yori."

Building a demand forecasting model by combining weather data and purchase data

"Urebi Yori" is a solution jointly developed by the Japan Weather Association and Dentsu Inc. It constantly reflects daily updated nationwide weather forecast information, including daily average temperature, sunshine duration, precipitation duration, and humidity. This enables capturing demand changes up to two weeks in advance, segmented by area and product category. Consequently, it can predict consumers' "I want it now!" or "I need it now!" moments in advance. This leads to highly efficient marketing strategies in TV planning and digital ad delivery, ensuring opportunities are not missed.

UrebiYori currently targets approximately 160 items (as of October 2020), primarily consumer goods like sports drinks and antiperspirants. Building on the success of UrebiYori, we explored incorporating data beyond meteorological information into our analysis. This led to the development of Michishiro, which enhances demand forecasting accuracy while providing comprehensive support for corporate marketing activities.

"Michishiro" creates predictive models using a diverse range of data alongside weather data, including purchase data, advertising placement data, TV program data, SNS data, and other unique time-series data. Based on the resulting forecasts, it provides consulting services that offer outlooks for sales expansion and cost reduction across all marketing domains. These include advertising and promotions, supply chain management (SCM) covering production and logistics, and in-store initiatives such as procurement and product assortment.

By placing demand forecasting at the core, we can improve a company's entire business actions.

 Accurate demand forecasting fundamentally transforms marketing activities. What does this mean specifically? Knowing when demand will rise in advance allows you to determine the most efficient timing and locations for promotions and advertising, making opportunity capture more certain. However, the benefits of demand forecasting extend beyond this. Improvements are expected in the following three key areas:

1. Uncovering Customer Insights

By tracking demand shifts, you can uncover the underlying customer insights driving them. Grasping the factors influencing demand allows you to refine your entire marketing strategy.

2. Streamlining Production Planning and Logistics

Accurate demand forecasting changes production planning. By aligning production capacity with actual demand, you eliminate waste like excess inventory and optimize logistics systems.

3. Enhancing Storefront Appeal

Accurate demand forecasting transforms in-store displays. Knowing demand will increase allows for targeted in-store initiatives, upgrading the store experience to be more appealing to customers.

As shown, the impact of demand forecasting extends far beyond advertising and promotions. It drives change across various areas of business operations—from marketing strategy to production and logistics, all the way to the creation of the storefront, the customer touchpoint.

Until now, many marketers have likely relied on past experience when creating marketing plans. The demand forecasting solutions introduced here utilize prediction models made possible by technological advancements, but they do not negate marketing based on human experience. This is because, with such tools, gaining the know-how of "when this prediction occurs, taking this action is effective" requires an essential process: repeatedly comparing forecast values with reality, trial and error, and taking time to steadily improve accuracy.

This is where experienced marketers become indispensable. When they handle demand forecasts derived from data, they can gain various insights and discoveries backed by their experience, significantly enhancing the quality of improvements to marketing activities.

We've explained the benefits of data-driven demand forecasting from the perspective of overall business operations. If you hear that a competitor achieved results by implementing demand forecasting, it likely means they started working on it quite some time ago, including the preparation period. To enhance your marketing precision going forward, why not consider adopting a demand forecasting solution at an early stage?