Sometimes jargon occupies too much of concepts, Being able to explain it in business terms is key to being able to relate to it.
Now we have data drift, and model drift. 13 years ago when we implemented forecast when the actual and prediction varied we ask the store manager
- Reason for it
- Does actual data make sense for future training or use forecasted data
Terms Exogenous / Endogenous can be put in more business-friendly Terms :)
Exogenous - External cause
1. Market Trends: This refers to the overall direction in which the market that the product or service is operating in is headed. It includes factors such as consumer behavior, buying trends, or preferences which can affect the sales forecast significantly.
2. Economic Conditions: This includes factors like inflation rates, unemployment rates, gross domestic product (GDP), etc. These conditions can influence consumer spending and thus directly affect the sales forecast.
3. Competition: The actions (like pricing strategies, marketing campaigns, product launches) of competitors in the market can also significantly impact the sales of a product or service. Hence, this is an important exogenous variable in sales forecast.
Endogenous - Internal cause
1. Past Sales Data: The historical sales performance is a key factor in predicting future sales. Based on historical data, businesses can form patterns and trends that help in forecasting future sales.
2. Pricing: The price of a product or service plays a crucial role in determining its demand. Changes in price, due to factors like discounts, offers, etc., can significantly influence sales.
3. Advertising and Promotions: The level of advertising and promotional activities can impact the demand of a product or service. Businesses can increase sales by intensifying their marketing efforts. Therefore, the effectiveness of advertising and promotional activities is directly related to the sales forecast.
Keep Exploring!!!
No comments:
Post a Comment