There are many different approaches to market forecasts. In the Defense and Aerospace we have the unique situation that customers and producers publish a lot of their requirements and expectations. This creates huge data amounts, but also helps us to improve the forecast.
A market forecast starts with a solid prediction of market volumes of the reference years, i.e. the year before the current year and the year therefore. This data is directly segmented into submarkets, for example: region, technology, end-use, and system element. The prediction of the market volume for the reference years will be based on requirements and company (production) information. The requirements approach is based on available data on requirements of governments/defense organizations as published on their websites, in road maps and other government publications. The production-based approach analyzes the sales of the leading companies and their shares in the market.
Subsequently a prediction needs to be made for the forecast period, normally eight years from the current year. This will again be based on requirements-, production data and in addition trends data. Trends data is based on the reference year data in combination with market factors, like drivers and inhibitors.
Now we have three data streams that need to fused into one market forecast. Here is the market knowledge and experience of the analyst key. He needs to determine, based on a thorough analysis of the market, which of these data sources is leading. Fusion of the data and analysis of the market to determine the trends data is based on dedicated chapters that are always part of the study:
Imagine all the information pieces are stored per segment per year and per data type (requirements, production, trend). This will create thousands of data points to be used for the forecast.
Market Forecast has developed a proprietary knowledgebase and forecast platform MF Engine® to handle this data. The platform contains modules for market data entry and control, including related documents, a forecast section, a Companies module, and an “advanced data collection” module.
The MF Engine® gives us the a tool validate our predictions
Sources used in our MF Engine® include ministries and other relevant government departments, company publications (annual reports, press releases), direct market contacts (Primary research), globally renowned think tanks (statistical databases), industry associations, financial reports, broker reports, investor presentations, industry trade journals and other literature, external proprietary databases, and Market Forecast data from our MF Engine®.
In addition to the market forecast, a forecast scenario based on will be made. Where the market forecast is based on a combination of traceable data and trends from predictable forecast factors, an Events based scenario is instead based on unpredictable factors like a geo-political potentiality or availability of funding. These events are less likely, but still feasible and therefore of interest to understand the market.