Sales planning for new products is tough! You have no past data and you don’t know if people will like the new product. Common flop rates of new products are ranging between 50% and 90%.
Hyundai, a Korean car maker, is publicly speculating about the sales potential of its new sports car the Veloster.
They say, it is too small to compete with the Renault Mégane Coupé, the VW Scirocco, or the Honda CR-Z. But it is also too big to compete with the BWM Mini Coupé.
So Hyundai did what most businesses are doing in such a situation. They made a guess. For Europe they plan to sell 20,000 units in the first year.
This is a valid approach but if the guess is based on only a few experts’ guts, it’s likely to be off by a significant amount. Hyundai might end up with having produced too many units, which would then be hard to sell in the next season. Or, and that would be worse too, having produced too few units that they could’ve sold, resulting in millions of foregone revenues.
When we encountered a similar situation at Henkel in 2009, we talked to the people who did gut-feel estimates at that time and asked them to do it with our Prediction Market. The result can be seen here: 22% higher forecasting accuracy…
