MBA FPX 5016 Assessment 2 Demand Management Plan for Wild Dog Coffee Company

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Demand Management Plan

Introduction

Forecasting demand is one of the most challenging aspects of business operations. While it can be demanding, it is not an insurmountable task. Accurate demand forecasting is crucial as it allows businesses to align their operations with customer demand. By analyzing shifting trends, companies gain insight into the general demand patterns for their products. Once these patterns are identified and understood, implementing a demand management plan becomes essential. This plan ensures that businesses manage current consumer demand effectively to avoid issues such as profit loss.

Demand management prepares companies to adapt to changing trends. In the coffee industry, seasonal trends are particularly significant. To stay competitive, businesses must recognize and manage these trends. Trends can be unpredictable, adding pressure on businesses to keep up. However, an actively responsive approach to changing patterns will foster business success. Data from Wild Dog Coffee Company’s current location will inform recommendations and analyses for demand management regarding inventory, forecasting, and scheduling. After establishing a demand management plan at the current location, it can be refined as needed before launching a second location. Effective forecasting of inventory needs, future demands, and strategic staff scheduling will enhance the efficiency and success of the second location.

Impact of Advertising on Product Demand

Advertising plays a crucial role in driving sales by connecting consumers to products. It creates value, engages customers, enhances competitive advantage, and increases business profits. However, simply allocating more funds to advertising does not guarantee increased sales. Wild Dog Coffee Company’s owners must strategize effective advertising by building a strong brand, targeting the right audience, and creating value for customers. While advertising budgets can drive sales, various cost-effective marketing approaches can also be successful. Social media platforms like Facebook and Twitter are excellent resources for affordable ad campaigns that reach large audiences. Spending $20 per day on Facebook can target many consumers based on specific interests, locations, demographics, and age. Targeting consumers with similar interests to the current customer base can significantly contribute to business growth. Therefore, if Wild Dog Coffee Company finds that its current advertising budget is sufficient, it is crucial to ensure that the right audience is targeted to avoid wasted marketing efforts. Various marketing tools can impact the company’s future sales at both current and new locations.

Forecasting Techniques

Forecasting is critical as it affects every aspect of a company. Understanding a product’s demand pattern is essential to maintaining adequate inventory and staying ahead of trends. This is particularly vital in the beverage industry due to its seasonal demand patterns. Wild Dog Coffee Company must be prepared to handle these specific patterns, whether daily, weekly, monthly, or seasonal, to remain competitive. The historical data supporting seasonal changes is used to plan for future demands. The forecast model for the required pounds of espresso beans for the seventh month is derived from the table below, based on a monthly advertising budget of $1,350.

Appendix A: Espresso Bean Use and Advertising Dollars

Appendix B: Forecast Linear Regression Model

Regression Model: f(x) = 0.79x + 188.23
R² = 0.95

Appendix C: Forecast for Month 7 Based on Regression Model