Techniques of Business Forecasting - Classified as Qualitative and Quantitative TechniquesIn the recent years, large numbers of techniques of forecasting have been evolved to handle different types of forecasting problems. Each technique has its special use and the manager has to select that which one is most suitable for application to his problem.The factors to be considered for making the choice of techniques for forecasting are as follows: (a) The purpose of forecast.(b) The degree of accuracy desirable.(c) The time period to be forecast.(d) Cost and benefit of the forecast to the company.(e) The time available for making the analysis.(f) Component of the system for which forecast has to be made. Basic forecasting techniques may be classified as: (1) Qualitative and(2) Quantitative.(1) Qualitative Techniques: A brief description of some of the qualitative techniques of forecasting is as follows: (i) Market Research Techniques: Under this technique, polls and surveys may be conducted to find out the sale of a product. This may be done by sending questionnaires to the present and prospective consumers. In addition, this may also be interviewed personally, though questions and interviews, the manager can find out whether the consumers are likely to increase or reduce their consumption of- the product and if so, by what margin. This interviews etc., and hence this method is somewhat costly and time consuming.(ii) Past Performance Technique: In this technique the forecasts are made on the basis of past data. This method can be used if the past has been consistent and the manager expects that the future will resemble the recent past. (iii) Internal Forecast: Under this technique indirect data are used for developing forecasts. For Example-For developing sales forecasts, each area sales manager may be asked to develop a sales forecast for his area. The area sales manager who is in charge of many sub-areas may ask his salesmen to develop a forecast for each sub-area in which they are working. On the basis of these estimates the total sales forecast for the entire concern may be developed by the business concern.(iv) Deductive Method: In the deductive method, investigation is made into the causes of the present situation and the relative importance of the factors that will influence the future volume of this activity. The main feature of this method is that it is not guided by the end and it relies on the present situation for probing into the future. This method, when compared to others, is more dynamic in character.(v) Direct vs. Indirect Methods: In the case of direct method, the different subordinate units on departments prepare estimates and the company takes the aggregate of these departmental estimates. This method is also called bottom up method of forecasting. On the other hand, in the case of indirect method of forecasting, first estimates are made for the entire trade or industry and then the share of the individual units of that industry is ascertained. This method is also called as "top down" method of forecasting.(vi) Jury of Executive Opinion: In this method of forecasting, the management may bring together top executives of different functional areas of the enterprise such as production, finance, sales, purchasing, personnel, etc., supplies them with the necessary information relating to the product for which the forecast has to be made, gets their views and on this basis arrives at a figure.(2) Quantitative Techniques: Quantitative techniques are known as statistical techniques. They focus entirely on patterns and on historical data. In this technique the data of past performance of a product or product line are used and analysed to establish a trend or rate of change which may show an increasing or decreasing