8/3/2019 Sales Forecasting Endterm
1/18
SALES
FORECASTING
Presented By:
AnantSheopuri
1008014
8/3/2019 Sales Forecasting Endterm
2/18
INTRODUCTION
It is an estimate of sales (value/units)
that a firm expects to achieve during a
specified forthcoming time period, in a
stated market and under a proposed
marketing plan
A sales forecast can be for an entire
range of products or an individualproduct within a product line.
8/3/2019 Sales Forecasting Endterm
3/18
GUIDING PRINCIPLES FOR
FOR
ECAS
TING
8/3/2019 Sales Forecasting Endterm
4/18
FACTORS AFFECTING SALES
FOR
ECAS
T
Marketing plans
Conditions within the industry
Market Conditions
General Business Conditions
8/3/2019 Sales Forecasting Endterm
5/18
SALES FORECASTING
METHOD
S Survey Methods
y Executive Opinion (Delphi technique)
y Sales Force Composite
y Buyers Intention Mathematical Methods
y Moving Average Method
y Exponential Smoothing Method
y Regression
Model
Operational Methods
y Test Markets
y Must Do Calculations
y Capacity Based Calculations
8/3/2019 Sales Forecasting Endterm
6/18
EXECUTIVE OPINION
Oldest & simplest of methods used in forecasting.
Obtaining views of top executives regarding future
sales.
Estimates made largely by observation,experience and intuition.
Used in companies that do not use forecasting
software.
Advantages- Quick & easy to do. Popular amongsmall & medium sized companies.
Disadvantages- Highly unscientific, just educated
guesses, time consuming, influential decisions.
8/3/2019 Sales Forecasting Endterm
7/18
DELPHITECHNIQUE
Highly Publicized technique by RandCorporation.
Select panel of experts.
Each expert makes predictions on somematter.
Resulting feedbacks are then given back
to experts for brainstorming session. Process repeated till experts arrive at
some consensus.
8/3/2019 Sales Forecasting Endterm
8/18
SALES FORCE COMPOSITE
Based on collecting an estimate from eachsales person of the product/services to sellin forecast period.
Estimate is made by consultation withsales executive & customer.
Individual forecasts are aggregated to formcompanys overall sales forecast.
Advantages: Made by person closest to the
market. Disadvantages: Time consuming for
managers, complicated process.
8/3/2019 Sales Forecasting Endterm
9/18
BUYERS INTENTIONS
Contacting potential customers and
questioning them.
Advantages: Direct contact with buyer.
Disadvantage: Time consuming, Costly,
no reliability of customers.
8/3/2019 Sales Forecasting Endterm
10/18
MOVING AVERAGE
TECHNI
QU
E Simplest way to forecast sales. Assumes that same conditions will prevail in the
future.
However factors affecting sales are never constant.
Therefore we take average of sales from severalperiods.
Salest+1 = 1/n (Salest + Salest-1 + Salest-2 +.+ Salest-n ).
Where;y t = current sales
y t+1 = Sales of next year (Forecasted Sales)
y n = no. of years taken into consideration.
y t-1 = Sales of immediate previous year.
8/3/2019 Sales Forecasting Endterm
11/18
EXPONENTIAL SMOOTHING
MODEL
Influence of past sales on future
predictions.
Sales t+1 = (L) * Actual Sales t + (1-L) *
Forecasted sales t
Value of L is derived by forecaster onbasis of experience and observation.
8/3/2019 Sales Forecasting Endterm
12/18
REGRESSION ANALYSIS
Used to project sales trends.
Sales totals are plotted on a graph foreach past time period.
Too complex a method hence used inlimited companies.
Requires highly skilled personnel in
regression analysis model.Availability of software programs has
increased use of this method.
8/3/2019 Sales Forecasting Endterm
13/18
TESTMARKETS
Involves introducing and marketing a newproduct in a market that is similar tocompanys other markets.
The demand for the product in the testmarket will be used to forecast sales ofproduct in the other markets.
Although it is time consuming and costly
yet it is the most accurate method ofestimating sales potential for products.
It eliminates the idea of guessing.
8/3/2019 Sales Forecasting Endterm
14/18
MUSTDO FORECASTS
Based on sales volume to generate
sufficient cash to cover fixed costs and
variable costs.
Others may allow the company to earn
some profits.
No historical data present.
Used by companies launching a newbrand/product in the market.
8/3/2019 Sales Forecasting Endterm
15/18
CAPACITY BASED
FOR
ECAS
TS
Sales according to capacity.
The company can sell at maximumcapacity.
Used by small businesses, restaurants
etc.
8/3/2019 Sales Forecasting Endterm
16/18
DIFFICULTYIN SALES
FOR
ECAS
TING
Accurate sales forecasting varies fromsituation to situation.
If sales of a product are stable in a yearthen forecasting is easier.
Difficult to make accurate forecasts fornew products, since historical data islacking.
8/3/2019 Sales Forecasting Endterm
17/18
REVIEW THE FORECASTING
PROC
ESS Periodic review of forecasting processes.
Determine accuracy of past forecasts.
Review data used in sales forecasting.
Changes in marketing expenditure must be
incorporated into preparation of sales
forecasts.
8/3/2019 Sales Forecasting Endterm
18/18