Answer:
The best step to take in forecasting initial demand is to use sales volumes of existing products to forecast demand for a new one.
This method is particularly useful since new product is a variation on an existing one involving, for example a new hot breakfast product made from whole grains that would require some minimal preparation by the consumer
Since it is a new product in the line of breakfast cereals, there variations can come in the form of a different color, size or flavor to increase marginal utitlity bearing in mind that the market segment is still the same.
Based on this forecast, you can make sales projections.
The forecasting techniques that can be used by the company include market research, historical analogy, panel consensus, etc.
It should be noted that forecasting techniques are predictive analysis of historical data in order to predict the future demand of a product.
Based on the question given, there's no historical data since it's a new product. Therefore, it's important to use market research in order to forecast how well the product will perform in the market.
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