System-Dynamics Models and Forecasts

Background

Most companies use one of the following approaches, in order to determine market sizes and to make market forecasts:

Traditional Approach: The sales department makes an estimate based upon historical data and available market information. The marketing department will conduct – usually based upon purchased market studies – their own market estimate. The ultimate valid market size is the result of a compromise between the two approaches.

Statistical Approach: Utilisation of complex multivariate regression models, partly including AI tools.

While in approach (1) the company uses its industrial and market expertis, the results are quite frequently subjective or even worse guided by specific interests of individuals within the organisation. Approach (2) may only be utilised, if sufficient historical data is available and the development of the relevant factors is linear.

Both approaches fail,

if one is dealing with new markets, for which the company does not have industrial expertise or historical data.

if exogeneous shocks, such as CoVid19 are disturbing the normal market development.

We support our customers with model based approaches

Examples of Projects:

Market forecast model for the elevator market in high rise buildings

Modelling of the development and forecast of the CoVid19 pandemic for various countries

Forecast for the alternative propulsion (hydrogen and battery electric) market in the railway industry

  • Quantitative and qualitative factors are being defined and modelled, using System-Dynamics.
  • All available empirical data will be collected and integrated into the model.
  • Influencing factors, which cannot be assessed empirically can be simulated in the model with varying degrees of impact and varying developments over time. The same is possible for exogeneous shocks.
  • The result fo the project is a system based market model, which our clients are then using for continuous sensitivity analyses, „What if,“ – simulations and forecasts.

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