7 Understanding seasonality
In this section we look at the idea of demand seasonality. This is where there are cyclical patterns in the demand data. Seasonality can occur over a range of timeframes. For example we will always expect some annual demand seasonality, but many services will see daily or hourly demand cycles they have to manage.
Activity 7 Causes of demand seasonality
Take a look at the following products. What are the underlying causes of demand seasonality over a year? To what extent will demand change?
Answer
There are two categories shown in the photos:
Products with weather seasonality
Products such as sun cream, soft drinks and umbrellas have seasonality based around weather. Sales of drinks and sun cream can go up by 500% in a week during a hot spell – but this is not the time people will buy umbrellas! There are other underlying factors – for instance the sun cream sales will also increase at a time when more people start to take summer holidays.
Products with event seasonality
Products such as Easter eggs and Christmas cards clearly have a seasonality based around particular festive events. A problem for those making them is that the sales window for such products can be narrow.
Other seasonal factors
What other seasonal factors exist? Beyond festive events and weather, are there any other causes of fluctuations in demand? Figure 5 below shows some of the underlying causes of demand seasonality.
The next section looks at situations where demand can spike during ‘one-off’ events.