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Sales

A sales forecast is a projection of expected customer demand for a company's products or services over a specific time horizon and under certain assumptions. It is an essential tool for business planning, marketing, and management decision making. Sales forecasting can help achieve sales goals and drive revenue by considering external factors like the economy and competition, as well as internal factors such as inventory levels and prices. Common sales forecasting methods include qualitative approaches like executive opinion and surveys, and quantitative approaches such as time series analysis, regression analysis, and market testing. Accurate forecasts allow for better inventory control, staffing, customer insights, sales management, and financing. However, forecasts also involve estimation and may be impacted by changing conditions.

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683 views19 pages

Sales

A sales forecast is a projection of expected customer demand for a company's products or services over a specific time horizon and under certain assumptions. It is an essential tool for business planning, marketing, and management decision making. Sales forecasting can help achieve sales goals and drive revenue by considering external factors like the economy and competition, as well as internal factors such as inventory levels and prices. Common sales forecasting methods include qualitative approaches like executive opinion and surveys, and quantitative approaches such as time series analysis, regression analysis, and market testing. Accurate forecasts allow for better inventory control, staffing, customer insights, sales management, and financing. However, forecasts also involve estimation and may be impacted by changing conditions.

Uploaded by

drbrijmohan
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
You are on page 1/ 19

1

What is Sales Forecasting?


 sales forecast is a projection of the expected
A customer demand for products or services at a
specific company, for a specific time horizon, and
with certain underlying assumptions
 Essential tool used for business planning, marketing,
and general management decision making.

 Sales forecasting can help you achieve sales goals.


 Sales forecasting can help drive sales revenue,
improve efficiency, increase customer retention and
2
Factors affecting sales forecasting
External Factors

 Relative state of the economy


 Direct and indirect competition
 Styles or fashions
 Consumer earnings
 Weather

3
Factors affecting sales forecasting
Internal Factors
 Labour problems
 Inventory shortages
 Working capital shortage
 Price changes
 Change in distribution method
 Production capability shortage
 New product lines

4
Sales Forecasting Methods
Qualitative Quantitative

Executive opinion method Time Series Analysis


Delphi Method Market Test
Sales force composite method Method Regression
Survey of Buyer’s intentions Analysis

5
Executive opinion method
 Most widely used
 Method of combining and averaging views of several
executives regarding a specific decision or forecast.
 Leads to a quicker (and often more reliable) result
without use of elaborate data manipulation and
statistical techniques.
Delphi Method
Process includes a coordinatorgetting forecasts
separately from experts, summarizing the
forecasts giving the summary report to experts who
till
are some
askedconsensus is reached
to make another prediction; the process 6
Sales force composite method
 Also known as “Grassroots Approach”
 Individualsalespersons forecast sales fortheir
territories
 Individual forecasts are combined & modified by the
sales manager to form the company sales forecast.
 Best used when a highly trained & specialized sales
force is used.

7
Survey of Buyer’s intentions
 Process includes asking customers about
their the company’s
intentions to buy
product and
services
 Questionnaire may contain other relevant questions

8
Time Series Analysis
Make forecasts based purely on historical patterns in
the data. It has four components
 The Trend component-Gradual upward or
downward
movement over time.

9
 The Cyclical Component
Sales are often effected by swings in general
economic activity as consumers have more or less
disposable income available

The Cyclical Component

10
 The Seasonal Component
It is a distinguished pattern to sales caused by
things such as the weather, holidays, local customs
and general consumer behaviour.

The Seasonal Component

11
 The Erratic events-Random Variations in data
caused by change and unusual situations
 Time series analysis are accurate for short term and
medium term forecasts and more so when demand
is stable or follows the past behavior.
techniques of time series
 S ome of the
popular analysis are:
 moving averages,
 exponential smoothing

12
Moving Averages
 The sales results of multiple prior periods are
averaged to predict a future period
 Called ‘moving’ because it si
continually recomputed as
new data becomes available,
it progresses by dropping the
earliest value and adding the
latest value.

13
Exponential Smoothing
 Similar to moving average method
 U s e d for short run forecasts
 Instead of weighing observations equally
generating the forecast, in exponential
all
smoothing
weighs the most recent observations heaviest
Next year’s sale=a(this year’s sale) + (1-a)(this year’s
forecast)
a is smoothing constant taken in scale 0-1

14
Market Test Method
 Used for developing one time forecasts particularly
relating to new products
 A market test provides data about consumers' actual
purchases and responsiveness to the various elements
of the marketing mix.
 O n the basis of the response received to a sample
market test, product sales forecast is prepared.

15
Regression Analysis
 Identifi es a statistical relationship between
sales(dependent and one or more
variable)
influencing factors, which are termed the
independent variables.
 When just one independent variable is considered
(eg. population growth), it is called a linear
regression, and the results can be shown as a line
graph predicting future values of sales based on
changes in the independent variable.
 When more than one independent variable si
considered, it is called a multiple regression 16
Benefits of Sales Forecasting
 Better control of Inventory
 Staffing
 Customer Information
 Use for Sales People
 Obtaining Financing

17
Limitations of Sales Forecasting
 Part hard fact, part guesswork
 Forecast may be wrong
 Times may change

18
19

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