What is demand planning? Best practices for marketers

Demand planning is a strategic process used by companies to forecast customer demand and plan their supply chain activities accordingly. This involves predicting future customer demand based on historical data, market trends, and other influencing factors. 

A comprehensive demand planning process often includes aspects like sales forecasting, inventory management, and production planning. The aim is to ensure that the right products are available at the right time, in the right quantities, without overstocking or stockouts, thus optimizing costs and meeting customer expectations. 

What is the importance of demand planning?

Demand planning is important to accurately predict future customer demand. Here’s what you get:

• Inventory management: Accurate demand planning and forecasting prevent overstocking, which ties up capital, and understocking, which can lead to lost sales and customer dissatisfaction.
• Cost reduction: By predicting demand accurately, a business can reduce costs associated with excess inventory storage, waste of perishable goods, and rush orders for restocking.
• Improved production scheduling: It enables efficient production planning, ensuring effective resource allocation and utilization, reducing lead times, and minimizing idle time in production.
• Supply chain management and efficiency: Intelligent demand planning optimizes the entire supply chain, improving supplier relationships and allowing for better negotiation and collaboration.
• Customer satisfaction: Demand planning ensures that customer expectations are met consistently, enhancing customer service and loyalty.
• Financial planning: It aids in more accurate financial forecasting and budgeting, impacting overall business profitability and strategic planning.
• Market responsiveness: With proper planning, businesses can respond more effectively to market trends and changing market demands, adapting their strategies to meet evolving customer needs.
• Risk mitigation: Planning helps in anticipating shifts in demand, allowing businesses to prepare for and mitigate risks associated with market volatility.

How does demand planning work?

Demand planning works by combining historical performance, real-time market signals, and business goals to forecast future demand, then aligning inventory, marketing, and production to meet it.

Here’s how the steps of the demand planning process usually go:

1. Teams start by pulling cross-functional data: Analysts gather inputs from historical sales, marketing activity, inventory levels, and market signals. These insights are all essential for creating an accurate forecast.
2. Analysts generate a baseline forecast: Using statistical models or AI, they estimate future demand based on patterns in the data.
3. Stakeholders layer in the business context: Sales and marketing teams contribute planned promotions, product launches, and pricing updates to refine the forecast.
4. Cross-functional teams align on a single view: Through collaborative review, teams validate assumptions and agree on a consensus forecast.
5. Operational teams translate the forecast into action: Forecasts are broken down by product line, region, and period, informing supply plans, procurement, and campaign execution.
6. Planning teams update forecasts as conditions shift: Regular adjustments keep the plan responsive, minimizing waste, improving ROI, and driving customer satisfaction.

What are the most common demand planning challenges businesses face?

Let’s review three common challenges faced by businesses in demand planning: 

1. The siloed landscape in demand planning and forecasting

In many companies, marketing and revenue management are separate entities, with marketing teams owning channels and sometimes the P&L, while trade budgets and retail media reside within the revenue management group. The lack of integration between these critical functions poses a challenge for achieving a cohesive business strategy.

2. The S&OP process

The Sales & Operations Planning (S&OP) process, conducted monthly, involves teams explaining the previous month’s performance and providing forecasts. Marketing and revenue management teams bring their perspectives to the table, leading to a consensus macro forecast. However, this process often lacks real-time collaboration.

3. Translating macro to micro

The macro forecast generated through the S&OP process must be translated into a granular SKU-level forecast by a demand planning team. Forecast accuracy, or achieving the right mix, is crucial, as it feeds into the supply chain, guiding production at plants while accounting for inventory levels.

Demand planning best practices

The right demand planning best practices help teams align across functions, respond to change in real time, and connect planning to performance. Let’s break down the essentials for building a faster, smarter, and more confident planning process.

1. Align cross-functional stakeholders early and often

Successful demand planning starts with alignment, especially across sales and marketing, finance, and operations. Each team brings a different lens: 

• Marketing knows what’s being promoted
• Sales knows what’s resonating
• Finance brings revenue targets and constraints

Use your demand planning process to build a unified perspective. That means moving beyond one-way updates to real collaboration, through S&OP, weekly planning syncs, or real-time marketing mix modeling platforms like Keen. Everyone should be working from the same demand forecasts, grounded in both data and business reality.

2. Build forecasts that are dynamic, not static

Today’s markets don’t wait for quarterly planning cycles. Media shifts, inventory delays, and promotional changes can all hit performance fast. That’s why leading brands treat forecasts as dynamic, built to evolve with real-world signals.

Dynamic forecasting incorporates new inputs—like in-flight campaign results, point-of-sale data, or supply disruptions—to maintain accurate forecasts over time. This level of responsiveness can help prevent over-ordering, reduce missed opportunities, and improve bottom-line efficiency.

This demand planning methodology also supports scenario modeling: What happens if we pull back on trade promotion management in one region, or double spend in another? Platforms like Keen let you simulate outcomes through scenario-based planning, turning static forecasts into strategic tools.

Keep learning: How Forecasting Helps Brands Drive Optimal Profitability

3. Connect marketing inputs directly to business outcomes

Marketing is one of the most influential—and often under-leveraged—inputs in demand planning. Campaign timing, messaging, and media mix all shape how, when, and where customers buy. That influence needs to be captured in your planning model.

The best marketing teams now feed their inputs directly into demand forecasts, making it easier to see how planned campaigns impact sales across every product line. When you can tie marketing activities to financial outcomes, it’s easier to defend spend, shift budget proactively, and scale what’s working.

This closed loop between marketing inputs and business results is where Keen thrives. With our real-time annual planning solution, you can connect your demand plan to what drives actual customer behavior and build a smarter path to growth.

Keen’s blueprint for intelligent demand planning

By providing a unified perspective across marketing, trade, and retail media, Keen’s AI-powered MMM platform drives unparalleled accuracy, consistency, and efficiency. This real-time consensus forecast can feed into demand planning and supply chain forecasts, streamlining the entire process. You can update models and actualize results every month. 

Leverage our platform as the source of truth for marketing, revenue management, and finance. 

• By offering a solution that fosters collaboration and delivers real-time data and insights, we enable continuous refinement and improvement while ensuring that businesses are equipped with accurate and actionable information to drive success.
• By unifying perspectives across marketing, trade, and retail media, our Demand Planning solution not only addresses existing inefficiencies but also acts as the catalyst for continuously improving results over time. 

Book a demo to get Keen and navigate your marketing and trade investments with a unified, efficient, and accurate approach.

Defining Demand Planning

Demand planning is a strategic process used by companies to forecast customer demand and plan their supply chain activities accordingly. This involves predicting future customer demand based on historical data, market trends, and other influencing factors. The aim is to ensure that the right products are available at the right time, in the right quantities, without overstocking or stockouts, thus optimizing costs and meeting customer expectations. Demand planning often includes aspects like sales forecasting, inventory management, and production planning.

The importance of accurate demand planning

Accurate demand planning is crucial for several reasons:

• Inventory Management: It helps in maintaining optimal inventory levels. Accurate demand forecasts prevent overstocking, which ties up capital, and understocking, which can lead to lost sales and customer dissatisfaction.
• Cost Reduction: By predicting demand accurately, a business can reduce costs associated with excess inventory storage, waste of perishable goods, and rush orders for restocking.
• Improved Production Scheduling: It enables efficient production planning, ensuring effective resource allocation and utilization, reducing lead times and minimizing idle time in production.
• Supply Chain Management and Efficiency: Accurate demand planning optimizes the entire supply chain, improving supplier relationships and allowing for better negotiation and collaboration.
• Customer Satisfaction: It ensures that customer demands are met consistently, enhancing customer service and loyalty.
• Financial Planning: It aids in more accurate financial forecasting and budgeting, impacting overall business profitability and strategic planning.
• Market Responsiveness: Businesses can respond more effectively to market trends and changing market demands, adapting their strategies to meet evolving customer needs.
• Risk Mitigation: It helps in anticipating shifts in demand, allowing businesses to prepare for and mitigate risks associated with market volatility.

Navigating Organizational Dynamics: Keen’s Blueprint for Unified Success

Trade spend operates in a complex ecosystem where marketing, trade, and retail media teams often function in silos, hindering the potential for unified success. This guide delves into the challenges faced by businesses in demand planning and trade operations, illuminating how Keen is poised to revolutionize the landscape by offering a unique opportunity to provide a unified perspective. Using Keen’s platform is a demand planning best practice, and has the potential to drive better accuracy, consistency, efficiency, and accountability, emerging as the source of truth for marketing, revenue management, and finance.

The Siloed Landscape:

In many companies, marketing and revenue management are separate entities, with marketing teams owning channels and sometimes the P&L, while trade budgets and retail media reside within the revenue management group. The lack of integration between these critical functions poses a challenge for achieving a cohesive business strategy.

The S&OP Process:

The Sales & Operations Planning (S&OP) process, conducted monthly, involves teams explaining the previous month’s performance and providing forecasts. Marketing and revenue management teams bring their perspectives to the table, leading to a consensus macro forecast. However, this process often lacks real-time collaboration and may not fully leverage the synergies between marketing, trade, and retail media.

Translating Macro to Micro:

The macro forecast generated through the S&OP process must be translated into a granular SKU-level forecast by a demand planning team. Forecast accuracy, or achieving the right mix is crucial, as it feeds into the supply chain, guiding production at plants while accounting for inventory levels.

The Keen Difference:

Keen steps into this landscape with a groundbreaking opportunity. By providing a unified perspective across marketing, trade, and retail media, Keen’s platform drives unparalleled accuracy, consistency, and efficiency. This real-time consensus forecast can seamlessly feed into demand planning and supply chain forecasts, streamlining the entire process.

The Source of Truth:

Keen can be the source of truth for marketing, revenue management, and finance. By offering a platform that fosters collaboration and delivers real-time data and insights, Keen enables continuous refinement and improvement while ensuring that businesses are equipped with accurate and actionable information to drive success.

Keen’s platform presents a transformative opportunity to overcome the challenges inherent in trade. By unifying perspectives across marketing, trade, and retail media, the Keen Platform not only addresses existing inefficiencies but also acts as the catalyst for continuously improving results over time. Further, Keen empowers you to update models and actualize results every month, becoming the source of truth in your organization. 

Get Keen and navigate your marketing and  trade investments with a unified, efficient, and accurate approach.