Forecasting Performance for North American Consumer Products

The Consumer Packaged Goods industry faced another year of challenges from economic turbulence and weak consumer confidence in 2011. North American shipments contracted slightly, and the study shows evidence of a heightened reliance on marketing activities to drive sales. Promotions continued to play an important role in 2011, with promotional volume climbing by 8%. Innovation was impressive in 2011, with new products accounting for onethird of all items. Furthermore, almost half the items of the collective dataset have less than two years of history, making it difficult to forecast with a reasonable amount of accuracy using traditional techniques of forecasting. Given the volatility and rapid pace of promotional activities and product Copyright © 2012 Journal of Business Forecasting | All Rights Reserved | Fall 2012 13 innovation, the gradual increase in forecast error and bias since 2009 comes as no surprise. Traditional forecasting techniques provide more or less the same performance across companies, with average weekly error rates of 53%. The spread in bias among companies is more pronounced—top performers achieve weekly bias of 3%, less than half the average level ...