What are the pros and cons of the three forecasting methods presented by Print up?
| | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 |
| Method 1: | | | | | |
| Number of American with BMI between 25 and 30 | 78200000 | 78200000 | 78200000 | 78200000 | 78200000 |
| x 35% actively trying to lose weight | 27370000 | 27370000 | 27370000 | 27370000 | 27370000 |
| x15% who are comfortable using diet pills | 4105500 | 4105500 | 4105500 | 4105500 | 4105500 |
| 10% who might purchase Metabocil in Year 1 with 5% increase every year | 410550 | 615825 | 821100 | 1026375 | 1231650 |
| Add: 60% who will buy second package | 246330 | 369495 | 492660 | 615825 | 738990 |
| Add: 20% who will buy a third package | 49266 | 73899 | 98532 | 123165 | 147798 |
| Total Sales | 706146 | 1059219 | 1412292 | 41765365 | 2118438 |
| | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 |
| Method 2: | | | | | |
| Number of American with BMI between 25 and 30 | 78200000 | 78200000 | 78200000 | 78200000 | 78200000 |
| x 12% immediately ready to go to health care provider | 9384000 | 9384000 | 9384000 | 9384000 | 9384000 |
| | | | | | |
| 10% who might purchase Metabical in Year 1 with 5% increase every year | 938400 | 1407600 | 1876800 | 2346000 | 2815200 |
| Add: 60% who will buy second package | 563040 | 844560 | 1126080 | 1407600 | 1689120 |
| Add: 20% who will buy a third package | 112608 | 168912 | 225216 | 281520 | 337824 |
| Total Sales | 1614048 | 2421072 | 3228096 | 4035120 | 4842144 |
| | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 |
| Method 3: | | | | | |
| Ideal Target Consumers (Educated Females 35-65 of age with BMIs between 25 and 30 | 4300000 | 4300000 | 4300000 | 4300000 | 4300000 |
| 30% of Ideal target market in first year with 5% increase each year | 1290000 | 1505000 | 1720000 | 1935000 | 2150000 |
| Add: 60% who will buy second package | 774000 | 903000 | 1032000 | 1161000 | 1290000 |
| Add: 20% who will buy a third package | 154800 | 180600 | 206400 | 232200 | 258000 |
| Total Sales | 2218800 | 2588600 | 2958400 | 3328200 | 3698000 |
Demand Forecasting Both Long and Printup were confident that sales of Metabical would quickly take off once health care providers and overweight individuals understood the value proposition of the new drug. Long expected Printup to use her experiences with past drug launches, together with the marketing research CSP had commissioned, to provide guidance on the expected unit volumes for Metabical in its first five years. Printup decided to project demand using three different approaches that were based on varying assumptions about how forecasted demand by looking at the number of overweight individuals in the United States (BMI between 25 and 30) and narrowing down that population to those who were actively trying to lose weight (35%, according to the CSP study). She felt this pool of potential users should again be narrowed to the 15% of those who were comfortable with weight-loss drugs. Printup's experiences taught her that Metabical was likely to capture 10% of those individuals in the first year, and in subsequent years she could expect an additional 5%, up to 30% by the fifth year. In addition, test trials suggested that 60% of the first-time users would repurchase a second supply and 20% of these would finish out the entire Metabical program by repurchasing the remaining supply customers would respond to Metabical. Her first approach Printup also developed a more aggressive forecast using the results from the CSP survey that specifically addressed consumer interest in a prescription weight-loss drug for the overweight Again, her starting point would be the number of overweight individuals in the United States, but this time she concentrated on the data point that 12% of the respondents were ready to immediately go to their health care provider to request a prescription She believed the previously developed penetration guidelines (10% increasing by 5% per year) and the 60%/20% model for repeat purchases would also apply to this forecast scenario. In a third approach to forecasting Printup focused on the ideal target consumer educated females, 35-65 of age with BMls between 25 and 30. Metabical was expected to capture a higher penetration of this ideal target (43 million potential users) than that of the general overweight population. Printup estimated Metabical would capture 30% of the ideal target market in the first year, with a 5% increase in share each year (up to 57% by year five). She felt the 60%/20% model for repeat purchases would hold true for this group of users as well Printup knew that her pricing and packaging decisions would have a direct impact on sales forecasts. All the pieces of the puzzle were starting to come together, and she was eager to analyze the potential demand and subsequent profitability to help her provide the best recommendations to Long Conclusion Printup sat down with her reports and notes stacked neatly around the perimeter of her desk. She had several critical decisions to make regarding Metabical's product launch. First, she wanted to determine the optimal package size for the drug. Next, she needed to put more thought into her pricing recommendation. She had developed three initial models for pricing, but felt she needed to explore how each of these would impact profitability before making her recommendation. To do this, she would have to establish initial demand forecasts for the product in its first five years and ensure t her pricing recommendation met the com company's desired ROL BRIEFCASES I HARVARD BUSINESS SCHOOL Demand Forecasting Both Long and Printup were confident that sales of Metabical would quickly take off once health care providers and overweight individuals understood the value proposition of the new drug. Long expected Printup to use her experiences with past drug launches, together with the marketing research CSP had commissioned, to provide guidance on the expected unit volumes for Metabical in its first five years. Printup decided to project demand using three different approaches that were based on varying assumptions about how forecasted demand by looking at the number of overweight individuals in the United States (BMI between 25 and 30) and narrowing down that population to those who were actively trying to lose weight (35%, according to the CSP study). She felt this pool of potential users should again be narrowed to the 15% of those who were comfortable with weight-loss drugs. Printup's experiences taught her that Metabical was likely to capture 10% of those individuals in the first year, and in subsequent years she could expect an additional 5%, up to 30% by the fifth year. In addition, test trials suggested that 60% of the first-time users would repurchase a second supply and 20% of these would finish out the entire Metabical program by repurchasing the remaining supply customers would respond to Metabical. Her first approach Printup also developed a more aggressive forecast using the results from the CSP survey that specifically addressed consumer interest in a prescription weight-loss drug for the overweight Again, her starting point would be the number of overweight individuals in the United States, but this time she concentrated on the data point that 12% of the respondents were ready to immediately go to their health care provider to request a prescription She believed the previously developed penetration guidelines (10% increasing by 5% per year) and the 60%/20% model for repeat purchases would also apply to this forecast scenario. In a third approach to forecasting Printup focused on the ideal target consumer educated females, 35-65 of age with BMls between 25 and 30. Metabical was expected to capture a higher penetration of this ideal target (43 million potential users) than that of the general overweight population. Printup estimated Metabical would capture 30% of the ideal target market in the first year, with a 5% increase in share each year (up to 57% by year five). She felt the 60%/20% model for repeat purchases would hold true for this group of users as well Printup knew that her pricing and packaging decisions would have a direct impact on sales forecasts. All the pieces of the puzzle were starting to come together, and she was eager to analyze the potential demand and subsequent profitability to help her provide the best recommendations to Long Conclusion Printup sat down with her reports and notes stacked neatly around the perimeter of her desk. She had several critical decisions to make regarding Metabical's product launch. First, she wanted to determine the optimal package size for the drug. Next, she needed to put more thought into her pricing recommendation. She had developed three initial models for pricing, but felt she needed to explore how each of these would impact profitability before making her recommendation. To do this, she would have to establish initial demand forecasts for the product in its first five years and ensure t her pricing recommendation met the com company's desired ROL BRIEFCASES I HARVARD BUSINESS SCHOOL
