It is a statistical technique to make predictions about the future which uses expert judgment instead of numerical analysis. This method of forecasting depends on the opinions and knowledge of highly qualified and experienced employees to predict future outcomes.
The types of qualitative forecasting methods are listed below:
1. Executive opinions: The opinions of experts from different departments are considered and averaged to forecast future sales. This method of forecasting can be done easily and quickly without the necessity of elaborate statistics. But the main disadvantage is that it depends on individual opinions that may not be unanimous and can vary from individual to individual which could lead to wrong forecasting.
2. Delphi technique: In this method, panels of experts are selected and are individually questioned about the upcoming events. They do not form a group. For long-range forecasting, this method is beneficial and very effective. The main disadvantage of this method is that from the returns there is a lack of and low reliability.
3. Consumer surveys: In this method, the survey is conducted directly on the customers on their purchases. The surveys can be done through telephone contacts, personal interviews or questionnaires to obtain data from the customers. This method requires extensive statistical analysis to test consumer behavior.
4. Salesforce polling: In this method, the forecast is done based on the opinions of salespeople who have steady interactions with the clients. As they are closest to the customers, they can better predict the requirements of the customers for the future market. The main advantage of this forecasting method is that it is very simple to use and understand. The information can be segregated easily into different categories. But the drawback is that the salespeople can be either optimistic or pessimistic about their predictions and this could lead to inaccurate forecasting.
In general, all the forecasting techniques assume the underlying relationship in the past and predict the relationship for the future. Most of the techniques are based on some previous data, opinions, surveys, etc.