liveBook · Manning

Internal demand driver

As explained in Demand Forecasting Best Practices

An internal demand driver is a controllable factor affecting demand, such as pricing, promotions, or marketing.

An internal demand driver is a factor affecting demand that a company can control. Pricing, promotions, marketing, events, shortages, and substitution products can change observed sales and should be assessed for both their demand impact and the availability of historical and future data. section 14.2.1

Use internal drivers in forecasting by checking whether they are measurable and known far enough ahead:

  • Include promotions when they materially affect demand: they are usually trackable and planned, making them useful forecast inputs. section 14.2.1
  • Model promotion types separately when their mechanics differ, or use actual discounted sales prices to represent discount impact. section 14.2.1
  • Account for shifted demand around recurring or announced promotions, including preorders, delayed purchases, rebounds, and self-cannibalization. section 14.2.1

A recurring promotion

A sales peak during a planned promotion does not necessarily represent baseline demand. Demand may fall before the event as customers wait, then fall afterward through rebound effects; a forecast should represent that surrounding pattern rather than only the peak. section 14.2.1

Table 14.1 Main Demand Drivers (view table figure)

Driver

History

Future

Promotions

✅

❓ Planned for medium-term

Events

✅

✅

Marketing

✅

❓ Usually short-term only

Pricing

✅

❓ Usually short-term only

Shortages

✅

✅

Weather

✅

❓ Very short-term

Competition

❌

❌

Macroeconomic indicators

✅

❓ Works if leading indicators

Compare which drivers have usable history and which have future information available at the planning horizon. section 14.2.1

How Demand Forecasting Best Practices covers it

How deep it goes
Defines internal drivers and details promotion measurement, modeling choices, and demand-shifting effects.
Examples
Uses promotion-driven sales, indirect coupons, discount schemes, and recurring-promotion self-cannibalization scenarios.
What you can do after
Apply it by including planned, trackable promotions and their surrounding demand effects in a demand model.
How it connects
Connects internal demand drivers to promotions, pricing, marketing, events, shortages, substitution products, and external demand drivers.
Cover of Demand Forecasting Best Practices
liveBookmanning.com
Read Demand Forecasting Best Practices on liveBook Get the book at manning.com

Related concepts

This explainer was generated by Manning's knowledge graph from the text of Demand Forecasting Best Practices. The section links point to the parts of the book it draws on.