How can companies more accurately measured and forecast demand?

There are several ways that can help companies predict demand.

- Study the Target Market - Market growth rate, consumption history, consumption growth rate, what influences their consumption, etc.

- Look at Past Consumption - Although this may not be a great way to forecast the future because of the multiple factors that can influence demand. It may provide a benchmark or general idea of demand in a stable market.

- Study other factors that may influence demand - Social, Economical, Technical

For example:

The demand for Christmas trees will likely increase in December.

The demand for VHS tapes will likely decrease as technology advances (i.e. DVDs, Blu-rays)

The demand for luxury items (e.g. Cars, Boats) may decrease as the average household income decreases.

- Market Research