What is a chain ratio method?

The chain ratio method is a forecasting technique used to estimate market potential or sales by breaking down the total market into smaller, manageable components. It involves multiplying a series of ratiOS that represent different stages or factors influencing the market, such as population size, target Demographics, and purchasing behavior. By applying these ratiOS sequentially, businesses can derive a more accurate forecast of sales or market size based on available data. This method is particularly useful for businesses with limited historical data or when entering new markets.