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Predictive Analysis vs Forecasting

By Priya PedamkarPriya Pedamkar

Predictive Analysis vs Forecasting

Difference Between Predictive Analysis vs Forecasting

Predictive Analysis vs Forecasting – While it is close to impossible to predict the future, understanding how the market will evolve and consumer trends will shape up is extremely important for brands and companies across all sectors. This is because consumers are an integral part of the success and growth story of any brand. This is because brands and consumers are an integral part of the market ecosystem. So in order to understand this ecosystem, it is important to conduct an in-depth market analysis. This predictive analysis will help you understand your target audience in a better manner on one hand and enhance and improve brand connect on the other hand. Together, this predictive analysis vs forecasting will help companies to grow in a profitable manner.

This article on Predictive Analysis vs Forecasting is structured as below:-

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  • Predictive Analysis vs Forecasting Infographics
  • What is predictive analysis and how does predictive analysis work?
  • Predictive Analysis vs Forecasting – How can it help companies?
  • 4 major benefits of forecasting are as follows
  • Conclusion of Predictive Analysis vs Forecasting

Head to Head Comparison Between Predictive Analysis vs Forecasting (Infographics)

Following is the comparison between Predictive Analysis and Forecasting.

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predictive analysis vs forecasting infographics

So what exactly is market analysis? Market data analysis is a technique in which brands use all the information available to them about the market and then create a strategy that will in turn help them, make use of the opportunities that exist. By properly understanding the current and future trends of the market, brands can choose the right strategy to get ahead in the market and generate high profits as well. Market analysis is a very aspect of business as it shows the success ratio of any companies and charters the future growth of the company in an effective fashion. In short, a market analysis reports helps a brand to document relevant and important information that can benefit business from the importance of launching a new product/service or how effective an advertising campaign will be in the future.

When conducted in an proper manner, market analysis can help brands to answer the following questions in a comprehensive manner:

  1. Who is our target audience?
  2. What are their needs and basic expectations?
  3. How can I market my products/services in such a manner that they stand out in the market?
  4. Who are my competitors and what are their USP?
  5. How are my advertising campaigns faring in the industry? What is the scope of improvements?
  6. How to reach the next stage of development?
  7. How can we use our resources in a better manner?
  8. Is there a need to change the priorities and objectives of my brand?

A well conducted and researched market analysis can help brands answer all these questions in an important manner. When the answer to these questions are know, it becomes easier for a brand to find a path in which they can implement changes that are good for the overall growth and development of a brand.

After understanding the importance of market analysis, let us look at the three stages that have to be conducted in order to create that analysis. For creating a good analysis, it is important to look into information about the company in an intricate manner. By understanding the past, present and future brands can create a good and comprehensive analysis.

  • Understanding reports of the past: By using the analysis of the past, brands can understand which campaigns were more successful in reaching their target audience. This will also help brands to understand the hurdles and challenges that they encountered while implementing their campaigns and thereby ensure that future campaigns are implemented in a successful and productive manner.
  • Analysing the current market situation: It is very important that companies understand the market and economy in which they are functioning. This is because understanding the market will help companies to not just connect with their target audience but also launch products and services that are in demand by the existing market. This in turn will help companies to maximise their resources, both material and non-material.
  • Predict the future in a successful manner: Market analysis can help companies to forecast the future trends and create plans that can be initiated resulting in maximum advantage, even over the competitors. By creating constant and powerful customer connections and ensuring high return on investments, brands can get better results in the future.

Predictive Analysis vs Forecasting are two methods that can help companies create effective market analysis plans. This is because through these two predictive analysis vs forecasting techniques brands can understand their customers better on one hand and can ensure better products and services on the other hand.

What is predictive analysis and how does predictive analysis work?

Predictive analysis is a technique that leverages statistics in order to predict future outcomes. Predictive Analysis can also be applied to events that have already happened. For instance, predictive analysis can be used to detect incidents that led to the crime and identify the criminals behind them as well.

The model used is based on the detection theory is dependent on the ratio of how often an outcome is possible after giving a certain amount of data, like the probability of a mail being a spam as compared to a mail that is important.

Classifiers can be used in models to find if data belongs to one set or the say. Say for instance in the case of emails, whether the mail is spam or normal. Because of its similar areas of learning predictive analysis is almost similar to machine learning. That is why when predictive modeling is deployed in commercial environment it is known as predictive analysis.

Predictive analytics can therefore help to optimise marketing campaigns but it is difficult to see their benefits beyond the. This makes predictive analysis close to impossible to implement predictive analysis techniques with have a good and comprehensive understanding about industry. That is why the best way in which to benefit from predictive analysis is to learn the basics of the industry.

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  • Predictors can help brands to rank their customers in a comprehensive manner: The central building block of any predictive analytic method is a predictor. For instance, recency is a predictor based on the amount of time since the said consumer has purchased a product/service of the brand. The more recent the consumer, the higher the value of their recency. A reliable campaign response predicator, consumers with higher recency will have greater chance of call back. This means that if the customer has recently purchased your product/service then they have better chances of giving you constructive feedback. In short, for every single prediction goal, there will be multiple predictors that can be used to rank the database of customer. For instance through predictors, brands can study the online behaviour of their customers. Those who spend less time online are not interested in extending their online subscription. By targeting customers who are more frequently online, brands can effectively maximise their resources in an effective manner.
  • Combining predictors can result in smarter rankings: Brands can create a model by bunching together multiple predictors.Creating a model is the main idea behind predictive analysis. One of the way in which two predictors can be combined is by simply adding them. So if both interest and time spent online can influence the chances of responding to a mailer, then a good predictor can be created by adding time spent online and interest. Such a scheme that is created by pulling together two predictors is thereafter known as a model and in the above case it is a linear model. That is why predictive analysis is sometimes called predictive modeling. At the same time, it is important to remember that in order to understand the complex nature of the market, predictive models will not be simple but really rich and complex and above all involve a lot of predictors.

Another aspect to keep in mind is that because there are so many predictive options available in the market, it becomes difficult to choose the correct one. With multiple formulas and industry complexity, it is close to impossible for brands to try them all in order to decide the best model.

Models of predictive analysis can be created on the computer as well where the organisation’s collective experience can be used understanding complex consumer behaviour and demographics. This is at the core a mixture of crunching as well as trial and error. Predictive analysis can be highly complex on one and very simple on the other hand, but it is important to remember that simple models may not be able to predict as well as the complex ones.

In conclusion, it is always better that a brand invests in a mutual models that is better able to predict customers and their behaviours. So while predictive analytics is based on automatic machine skills, the skills needed to drive them are human and therefore every brand must invest in both predictive analysis vs forecasting in a successful fashion.

Predictive Analysis vs Forecasting – How can it help companies?

Forecasting is a method by which companies find out trends that will dominate the market in the company years. It has many advantages not just for new startups but for established and old companies. Forecasting is defined as a planning tool that can help the management to cope with an uncertain future, mainly through the use of past data and analysis of market trends. The process of forecasting begins with certain assumptions that are based on the management experience, knowledge and astute judgement sense of the management team. These estimates are then projected on techniques like Box-Jenkins models, Delphi method, exponential smoothing, moving averages, regression analysis, and trend projection. Since any error in the assumptions will also result in a similar or magnified error in forecasting results, the technique of sensitivity analysis is used where a range of values is assigned to uncertain factors, which are also called variables.

predictive modeling

4 Major Benefits of Forecasting

Given below are the major benefits of forecasting.

  1. forecasting helps in establishing new startups and promoting new brands: Forecasting is an important element when new brands are being set up in the industry. This is especially true when the industry is filled with multiple challenges and there are many hurdles in the path of seeing up a successful brand. Forecasting can help entrepreneurs to find out the best way that they can overcome these challenges and thereby establish a successful company. Through forecasting brands can understand how they will be perceived in the market and whether their products have the capability to meet the expectations and demands of the target audience. In short, good and strong forecasting can help startup companies to increase their chances of success by helping them plan and strategise their entry in a much better manner. At the same time, good forecasting can help new brands to meet the supply and demand situation, thereby increasing their brand power and loyalty.
  1. Forecasting can help brands to use their financial resources in a much better manner, than before: Financial concerns, especially for new and small companies is a very important aspect. That is why it is important that in such situations, the available resources are utilised in a proper and effective manner. As no brand can survive without adequate capital, financial forecasting plays a very important role in such a scenario. By helping companies to divide their resources in a proper manner, financial forecasting can hold the key to proper and effective financial planning in a company.
  2. Forecasting can help the administration take good and successful management decisions: Every company is based on good administrative decisions. Without a strong administrative backbone, companies will completely turn into a failure, sooner or later. The administration team of any company is essentially a decision making process and has responsibility for making decisions and for ascertaining that the decisions made are carried out. That is why it is important that the wheels of the administrative department is working in a continue manner and it is here that forecasting plays a very important role as it helps companies to take decisions at the right time.
  3. Forecasting helps companies to plan in a systematic manner: Planning is a very important component of any company, be it in the long term or short term. Forecasting can help companies to plan their growth strategy while keeping in mind the needs of the consumers while at the same time having an intricate understanding of the market trends as well. In other words, good and proper planning whether it is for the overall growth of the company or for a section of the company is completely dependent on good forecasting techniques.

Conclusion

In the end, both Predictive Analysis vs Forecasting are two techniques through which brands can correctly forecast and understand market techniques while at the same time meet customer expectations as well. In short, the need today is not for better Predictive Analysis vs Forecasting methods, but for better application of the techniques at hand.

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This has been a guide to Predictive Analysis vs Forecasting. Here we have discussed comparison, working and major benefits associated in a detail manner. You may also have a look at the following articles to learn more –

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