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Marketers of all stripes are often tasked with forecasting—sales for next quarter or year, inventory levels to meet demand, or marketing budget to meet corporate goals. However, the process of forecasting is often rife with bias, data quality issues, mathematical error, and/or poor planning assumptions. While no forecasting technique is perfect, predictions can be drastically improved through a simple technique: pulling your anchor.

Let’s face it, the ability to peer around the corner and forecast the future (tomorrow, much less next month) is one of the biggest challenges for global business executives. If you have made forecasting mistakes in the past, take heart, you’re not alone. You can however, learn to forecast a bit better by avoiding a common mistake—anchoring.

The concept of anchoring in decision making was made famous by psychologists Daniel Kahneman and Amos Tversky. In a well known experiment, they asked a group of people to estimate the percentage of African countries in the United Nations.

Full story: http://www.mpdailyfix.com/2009/02/predicting_the_future_anchors.html

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