Definition: Under the End Use Method, also called as the User Expectation Method, the list of several users of the product under forecasting is prepared first, who are then asked about their individual purchasing patterns and then from such information the complete product demand forecast is ascertained.
Simply, the method used to know the buyer’s likely consumption of the product, his future buying plans and likely the market share of the company is called as end use method. Since the intentions of the buyers are taken into the consideration, this method is also called as the “Survey of Buyer’s Intentions”.
The End Use Method is particularly suitable for Industrial Products such as raw materials or intermediary products because unlike consumer goods these are limited in number and can be surveyed exhaustively. Also, the buyers are substantial in the case of the industrial goods, whereas in the case of the consumer goods, several thousands of buyers contribute towards the total sales, where each accounts for a very small quantity.
The other reason that supports this discussion is that the industrial buyers are often clustered in the industrial belts and are accessed directly by the manufacturers, whereas in the case of the consumer goods, the buyers are scattered and are reached via several distribution channels or intermediaries. Finally, the user survey can be well applied to the industry buyers as it involves the production people, material, and corporate planning executives in purchase team, who have a complete knowledge about the product whereabouts and can very well relate their needs to a product.
One of the major advantages of the end use method is that the forecast comes directly from the end user i.e. customer himself. Also, such forecast is already broken into user-wise and industry-wide data and thus require no extra efforts to sort these.
The end use method is not free from the demerits. The major limitation of this method is that sometimes the respondents themselves does not know about their consumption patterns and might be reluctant in disclosing their buying plans.