Sales forecasting

04/12/2023 Srishti School of Business

Sales Forecasting


M arketing P lan

Sales Fo recasts Sales Fo rce B udget

PLANNING/FORECASTING/BUDGETING SEQUENCE


Conservative estimate of the expected volume of sales and is used for purchasing. production and cash flow decisions

Sales Budget


Sales Forecast

• A sales forecast is the estimated rupees or unit sales for a specific future time period based on a proposed marketing plan and an assumed market environment. OR

• Expected level of company sales based on a chosen marketing plan and an assumed marketing environment.


Sales Forecasting - Why is it necessary?

• 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


Among the major factors considered when forecasting sales are:

Sales forecasting is the process of predicting sales of goods and services.

Sales Forecasting

1. Past sales levels and trends

2. General economic trends3. Economic trends in the

company’s industry4. Other factors expected to

affect sales in the industry5. Political and legal events6. The intended pricing policy

of the company

7. Planned advertising and product promotion

8. Expected action of competitors

9. New products contemplated by the company or other firms

10. Market research studies


Terms:• Potential Market – A set of consumers

who profess a sufficient level of interest in a product or service

• Available Market - A set of consumers who have interest , income and access to a particular product or service

• Qualified available market - A set of consumers who have interest, income, access and qualifications for the particular product or service


Terms:

• Target Market - Part of the qualified available market the company decides to pursue

• Penetrated Market -A set of consumers who are buying the company’s product or service

• Sales Target - Sales goal for a product line, company division or a sales rep. It is a benchmark to evaluate achievements against goals set.


F oreca st O bjective

D eterm ine D ependen t a nd I ndepen den t V a ria bles

D evelop F oreca st P rocedure

S elect F oreca st A na lysis M ethod

T ota l F oreca st P rocedure

G a ther an d A na lyz e D a ta

P resen t A ssu m ptions a bou t D a ta

M ak e a n d F ina liz e F oreca st

E va lua te R esu lts versu s F oreca st

SALES FORECASTING PROCESS


Company sales potential is the maximum estimated or potential sales the company may reach in a defined time period under given conditions.

The company’s share of the estimated sales for an entire industry is referred to as market share.

Industry sales forecast, or market potential, is the estimated sales for all sellers.


Sales forecasting vs. Plan

• Sales forecasting - is a projection in to the future of expected sales, given a stated set of environmental conditions

• Sales plan- is a set of specified managerial actions to be undertaken to meet or exceed the sales forecast


Forecasting approaches

• Top down/Break down approach• Bottom-up/buildup approach


Forecasting approachesTop down/Break down

approachFore cast relevant external environmental

factors over specified time period

Forecast industry sales(or market potential ) for relevant industry

over specified time period

Company sales potential =industry sales forecast(step-2)x company’s share of total

industry sales in %

Company sales forecast of the product/services under study

Sales/marketing manager forecasts for regions, branches,territories, & customers

Step 1

Step 2

Step 3

Step 4

Step 5


Forecasting approachesBottom up / Build up

ApproachCombined into company Sales forecast

Combined into regional/zonal sales forecast

Combined into area/branch sales forecast

Sales persons’ sales forecast of individual customers

Step 4

Step 3

Step 2

Step 1

Sales forecasting

Education

Transcript of Sales forecasting