Sales forecasting

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Sales forecasting:

Sales forecasting Presented By. Kamlesh Chhugani Ajay Kumar

Introduction of sales forecasting:

Introduction of sales forecasting A systematic attempt to probe future with the help of known facts. It is the “analysis and interpretation of the future conditions in relation to operations of enterprise.” Thus, its the process of predicting future systematically. The result of this process is known as forecasts. Its a difficult area of management. Most of us believe we are good at forecasting. However, forecasts made usually turn out to be wrong! Marketers argue about whether its a science or an art. The short answer is that it is a bit of both.

Steps in sales forecasting:

Steps in sales forecasting Defining the objectives to be achieved. Dividing various products into homogenous groups. Analyzing the importance of various factors to be studied for sales forecasting. Selecting the methods. Collecting and analyzing the related information. Drawing conclusions from the analysis made. Implementing the decisions taken. Reviewing and revising the sales forecasting from time to time.

Methods of sales forecasting:

Methods of sales forecasting Survey methods: Based on the opinion of buyers & consumers. First We select the potential buyers/consumers then collects their opinions for forecasting. Expert opinion: A company invites the opinions of executives and consultants who acknowledged experts in studying sales trends. By the opinions, it forecast future sales. This estimate is also based on past performance.

PowerPoint Presentation:

Market test methods: Its used for the changing consumer behavior prices,advertising,expenditure etc. It allows management to know how consumer will buy go for a particular product. Sales force opinion: Estimates the buyers intention from experienced personnel in the sales force. They can easily forecast for their respective territories. This method can be used only when the firm has competent high-caliber sales personnel.

PowerPoint Presentation:

Statistical methods: Its superior techniques because their reliability is higher than that of other techniques. A. Trends methods. B. Graphical methods. C. Time series methods. ( i ) freehold methods. (ii) Semi average methods. (iii) Moving average methods. (iv) Methods of least squares. D. Regression line.

Significance of Forecasting:

Significance of Forecasting An essential element of planning. It means estimating future sales on a systematic basis. Almost every business executive makes sales forecasting. Has assumed great importance in the modern business world which is characterized by growing competition, rapidity of changes in environment, fast technological changes and increased government control.


Advantages ( i ) For effective planning by providing a scientific and reliable basis for anticipating future operations such as production, inventory, supply of capital and so on. (ii) For reducing the area of uncertainty that surrounds management decision-making with respect to cost, production, profits, pricing, etc. (iii) Making and reviewing on a continuous basis will compel the managers to think ahead and to search for the best possible decisions with a dynamic approach. (iv) For efficient managerial control as Forecast of sales a must in order to control the costs of production and the productivity of personnel.

Limitations of Forecasting:

Limitations of Forecasting All forecasts are subject to a degree of error and they can never be made with a hundred percent accuracy. Guesswork can never be omitted from forecasting, though it can be reduced with the help of modern quantitative techniques. Managers often neglect to examine whether the forecasts are supported by reliable information . Managers must use their knowledge, experience and available information with a great degree of skill and take care to make forecasts more dependable.

Steps in Forecasting :

Steps in Forecasting ( i ) Understanding the Problem (ii) Developing the Groundwork iii) Selecting and Analyzing Data (iv) Estimating Future Events

Sales Forecasting - Why is it necessary?:

Sales Forecasting - Why is it necessary? To increase the profitability. To increase the revenue. To increase the customer base. To retain more and more customer. To raise the necessary cash for investment and operations To establish capacity and output levels To acquire and stock the right amount of supplies To hire the required number of people

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