The PDMA Handbook of New Product Development

23.6. New Product Forecasting Benchmarks

NOTE

New product forecasting is characteristically associated with low accuracy.

Even with a plethora of techniques and a keen strategy, new product forecasting is characteristically associated with low accuracy (high forecast error). As shown in Table 23.1, the overall average accuracy across the six types of new products was 58 percent, with cost improvements generally being 72 percent accurate; product improvement forecasts 65 percent accurate; line extension forecasts 63 percent accurate; market extension forecasts 54 percent accurate; new category entry (new-to-the-company) forecasts 47 percent accurate; and new-to-the-world products 40 percent accurate. Note that these mean values of new product forecasting accuracy were collected by asking respondents to indicate the average forecast accuracy achieved one year postlaunch (see Kahn, 2003). The nature of these accuracy percentages reaffirms the fact that new markets are more troublesome to forecast (i.e., market extensions, new category entries, and new-to-the-world products) than those where a current market is being served (i.e., cost improvements, product improvements, line extensions).

Table 23.1. PERCENT FORECAST ACCURACY AND FORECAST HORIZON FOR NEW PRODUCT FORECASTS

Type of New Product	Average % Accuracy Achieved (Standard Deviation, Sample Size)	Forecast Horizon in Months (Standard Deviation, Sample Size)
Cost improvements	71.62(sd = 22.46, n = 29)	21.15(sd = 21.15, n= 40)
Product ...