forecastingprinciples.com Reviews of Important Papers on Forecasting
Before 1985 Reviews
Review of:

Roger A. More and Blair Little (1980),  “The application of discriminant analysis to the prediction of sales forecast uncertainty in new product situations,” Journal of the Operational Research Society, 31,71-77.


Is it possible to assess the sales forecast uncertainty in a new product introduction? More and Little raise this important question. They present a conceptual model relating the error in the first year’s sales forecast to marketing task similarity and marketing task complexity (which, in turn, was a function of buyer-risk, distribution difficulty, and competitive advantage). Data from 185 new product situations were collected by personal interviews and self-administered questionnaires from 152 Canadian firms. The discriminant function did somewhat better than chance in identifying the high risk introductions (over 20 per cent error in unit sales) when tested in a hold-out sample. This test was flawed because the respondents knew the outcome. Furthermore, a more revealing comparison than testing against chance would be against the currently used subjective methods. Finally, the report omits key details of the study. Hopefully, they will extend this work.