AI-Driven New Product Forecasting: A Modern Approach

Introduction

When it comes to new product launches, getting the demand forecast wrong isn't just a minor setback - it's a multi-million-dollar problem. Whether you’re releasing the next big innovation or just updating an existing product line, missing the mark on your demand forecast can mean lost revenue, unhappy customers, and warehouses full of products. And companies aren’t just missing their forecasts by a little. In fact, the Institute of Business Forecasting & Planning says companies get their demand forecasts wrong by an average of 64%.¹

‍

The Institute of Business Forecasting & Planning (IBF) reports an average forecast error rate of 64% for new products.¹

That's where Ikigai's AI platform comes in. We've built a forecasting solution that’s specifically designed for new products, even when you have zero historical data to work with. In this eBook, we'll show you how to escape the guesswork, use AI to make better predictions, and get real results that hit your bottom line. No more crossing your fingers and hoping for the best - let's transform how you launch products.

The New Product Challenge

Every new product launch is a high-stakes endeavor. With no historical data to rely on, traditional forecasting methods often fail, leading to:

Revenue loss from stockouts

Stockouts during product launches lead to missed sales opportunities and immediate revenue losses that can't be recovered when customer demand goes unmet.

Working capital trapped in excess inventory

Overestimating demand ties up valuable working capital in excess inventory, impacting cash flow and warehouse capacity while increasing carrying costs.

Brand damage from poor availability

Poor product availability frustrates customers and damages brand reputation, potentially impacting not just current sales but future purchasing decisions.

Strained relationships with distribution partners

When distribution partners can’t rely on accurate forecasts, it strains relationships and can lead to reduced shelf space and promotional support for future launches.

‍Why Traditional Approaches Fall Short

Many enterprises still rely on spreadsheets or rigid traditional forecasting systems that are simply not set up to manage the complexities that launching a new product involves. These legacy tools force teams to make precise predictions with imprecise data, leading to a cascade of costly miscalculations throughout the supply chain. Meanwhile, the market keeps moving, competitors keep launching, and consumer preferences keep shifting in ways that no spreadsheet could ever anticipate.

The AI-Driven Solution

To address the complexities of launching new products in today’s dynamic markets, Ikigai has developed five interconnected capabilities that tackle the core challenges of limited historical data, multi-tier forecasting, and rapid market shifts. This integrated approach combines Time2Vec pattern recognition, dynamic learning, expert-guided oversight, scenario planning, and hierarchical reconciliation to fundamentally transform how companies bring new products to market with greater confidence and precision.

‍Time2Vec

Time2Vec is a unique approach at the heart of Ikigai's AI technology that learns temporal patterns, like seasonality and trends, from similar products, categories, competitor data, and external signals. For new products lacking direct sales history, Time2Vec infers likely demand patterns by analyzing similar product, channel, geographical attributes and histories, alongside any available external data like weather or marketing promotions.

‍

Value to you

• Automatically identify similar products using product, channel, and regional attributes
• Utilize fine-grained combinations of similar products (i.e., 30% like product A and 70% like product B)
• Generate dynamic forecasts that automatically update with new data
• Enables testing scenarios by adjusting variables like pricing, promotions, and supply parameters

Dynamic, Scalable Learning

Legacy forecasting systems lag market reality, relying on outdated data and rigid hierarchies that fail to capture the true dynamics of today's fast-moving markets. Ikigai's dynamic forecasting capabilities transform this paradigm by continuously processing millions of real-time signals across your business, automatically refining predictions as new data emerges to keep you ahead of market shifts.

Value to you

• Automatically capture correlations from internal and real-time market signals like weather, social media, and competitor actions
• Generate millions of granular forecasts across hierarchy levels, dynamically adjusting to new sales data for greater accuracy in existing and new products
• Automatically refine forecasts based on actual sales performance, eliminating the lag between market changes and forecast adjustments

Hierarchical Reconciliation

Complex product hierarchies need forecasts that work at every level - from individual SKUs to stores to global operations. Ikigai utilizes sophisticated AI-powered hierarchical reconciliation to deliver consistent, actionable insights across your entire organization.

Value to you

• Align forecasts automatically across all business levels - from SKUs to corporate views
• Maintain forecast accuracy across products, regions, channels, and organizational hierarchies
• Predict cannibalization effects when launching new products
• Identify hidden sales opportunities across complementary product lines
• Manage complex regional variations in seasonal demand and local preferences

‍

What-If Scenario Planning

Traditional forecasting falls short in today's complex markets by relying on rigid point predictions rather than considering the full range of possible outcomes. Ikigai's scenario planning capabilities enable you to enable you to simulate various launch scenarios to plan for any outcome.

Value to you

• Be better prepared for all product launch scenarios by generating probability-based forecasts that account for the full spectrum of potential outcomes, not just point predictions
• Model scenario impact by adjusting key variables like pricing, marketing spend, promotional activity, weather, and more
• Run parallel what-if scenarios to understand how combinations of decisions affect demand patterns and operational requirements

Expert-in-the-Loop and Explainable AI

The key to highly-accurate new product forecasting is harnessing the unique strengths of human knowledge and advanced AI techniques. The Ikigai platform is designed with humans in mind, incorporating their domain knowledge into forecasts and plans, and providing intuitive and explainable outputs that can easily be adopted into standard business practices.

Value to you

• Blend human expertise and intuition with AI predictions to improve forecast accuracy
• Override or refine AI recommendations based on competitive insights and market shifts
• Adjust and automatically regenerate forecasts at any level - from individual products to entire categories
• Provide transparent, explainable forecast drivers to ensure stakeholders can trust and act on the platform’s recommendations

‍Real Business Impact

‍

Organizations implementing AI-driven forecasting for new product launches experience significant improvements in revenue generation and operational efficiency. Ikigai has shown 30% higher forecast accuracy across a broad range of companies, enabling our clients to better position inventory and capture 8-12% more revenue during the launch phase. These enhanced predictions reduce excess inventory by 25-35% while decreasing stockouts by 25-30%, which helps increase the organization’s working capital.

The impact extends beyond financial metrics to transform how analysts and planners spend their time, shifting focus from generating forecasts to delivering strategic insights. Teams typically see an 80% reduction in manual forecasting tasks by leveraging Ikigai’s AI platform. Analyzing millions of scenarios simultaneously results in more effective, data-driven decision-making, helping companies optimize launch strategies and respond more effectively to changing market conditions.

Is Your Forecasting Approach Ready for Your Next Big Launch?

01. Assess your current state using forecasting maturity model

How often does your team face sudden changes in demand due to promotions, competitor moves, or seasonality?

How many hierarchical levels (e.g., product category, region, channel) must you consider when forecasting?

How often do you launch new products or manage short product lifecycles?

How often do you launch new products or manage short product lifecycles?

• Take the quiz here.

02. Identify high-risk areas of the business

Pinpoint the products, categories, channels, or regions most impacted by unpredictable demand.

03. Explore AI-driven forecasting

Investigate solutions like Ikigai, which uses Time2Vec, probabilistic modeling, and hierarchical reconciliation to eliminate guesswork and manage global complexity.

04. Run a pilot

Implement a pilot project on your highest-risk products or geographies, then compare results to your legacy forecasting tool.

05. Align cross-functional teams

Involve supply chain, finance, and marketing to ensure data-driven forecasting becomes a company-wide advantage.

‍Conclusion

The future of new product forecasting isn't about eliminating uncertainty—it's about managing it with intelligence, adaptability, and precision. AI-driven approaches enable businesses to move beyond guesswork to confidently navigate product launches in today's dynamic markets.

Ikigai offers a modern approach to new product forecasting, combining innovative technologies like Time2Vec pattern recognition, dynamic and scalable learning, what-if scenario planning, and expert-guided oversight, to significantly improve revenue generation and operational efficiency. This AI-driven approach not only improves forecast accuracy by more than 30% but delivers tangible business results - from 20% reductions in inventory costs to 50% less time spent on manual forecasting tasks.

Explore our interactive demo to see how Ikigai can help your business transform your next product launch.

‍

Additional resources

• Eliminating Guesswork in New Product Launches:  How Ikigai’s AI Redefines Demand Forecasting
• Why forecasting new product demand is like driving without a map - and how AI can help

Download PDF

To download the eBook as a PDF, click here.

To learn more about Ikigai's new product forecasting, visit here.

‍