PRESENTATION ON : SALE
FORECASTING
SUMITTED BY : Twinkle Verma
roll no : 5701
sumitted to : miss preeti mam
Sales
Forecasting
Introduction
Modern-day salesmanship is highly technical.
To make sales more effective and constant,
there is no need of constant watch to have a
rigorous planning. Effective sales planning is
quite helpful foe efficient running of business,
prosper and to survive long.
What is sales forecasting and its methods?
Sales forecasting is a process of estimating the future
sales pattern of a firm by taking the past information and
opinion into the account for a desired period of time.
“The company sales forecast is the expected level of
company sales based on a chosen marketing plan and
assumed environmental conditions.”
If sales forecasting is not done properly, then a firm may
end up having high level of inventory at each level of the
production process, which may increase the cost of the
product and squeeze the profits.
METHOD OF SALE FORECASTING
Graphic
Method of analysis
Survey of
consumer sale
buying forecating Time
plans series
analysis
Test Projection
mareting of past
sales
Regressi Poli of
on sales –
analysis forces
Jury or opinion
executive
opinion
Jury of Executive Opinion Method
IT is an opinion based method of estimating the future
sales .A small number of top executive are requested
to register their individual opinion relating to the
probable amount of future sales in the first place
MERITS
1 .This is a quick and easy way turn out a forecast .
2.This is way to pool the experience and judgments of
well-informed people
Poll of Sales force Opinion Method
It is also opinion based method and is commonly called
as Grass-root approach’ method. In this method
individual sales personnel from different sales-
territories are asked to provide sales forecasts. Later on
these forecasts are combined, modified and moulded by
the higher authorities to predict and design the total or
the master forecast for the firm.
MERITS
1)Suggestions come from those persons who are directly
closer to market conditions.
2)This is very easy, simple and cheapest way to forecast.
Projection of Past Sales Method
Future sales are based on the past sales to a
very great extent. Projection of past sales
method takes variety of shapes.
The most common model can be
This year’s sale * This year’s sales
Last year’s sales
SIMULATION METHOD
This method makes use of mathematical model
in the form of an equation or a set of equation
to represent a set of relationship among
different demands determining independent
variables and sales.
The equation used is
Where S=R+N
S=Total Sales
R= Replacement Demand
Regression Analysis
Regression analysis is a statistical process and, as used
in sales forecasting, determines and measures the
association between company sales and other variables.
There are 3 major steps in forecasting sales through
regression analysis:
1)Identify variables casually related to company sales.
2)Determine for estimate the values of these variables
related to sales.
3) Derive the sales forecasts from this estimates.
An example of multiple linear regression model is:
Y=a+b1X1+b2X2+e
Feature of Sale Forecasting
Sale Forecasting is concerned with future
sale.
Forecasting is done by analysing the past
and present events .
He quality of sale forecasting depends on
the reliability of information.
Sale Forecaste can be made for short term
as well as long term.
Sale Forecasting Process
1.Define the
objective
Types of Forecasting
Types of
Forecasting
Micro
Macro Forecasting
Forecasting
The selection of which type of forecasting
to use depends on the several factors
The degree of accuracy required.- If the decisions are to made on the basis
of the sales forecast have high risks attached to them, then it stands to the
reason that the forecast should be prepared as accurately as possible. But
this involves huge cost.
The availability of data and information.- the forecast will also depend on
the availability of the information available from market. In some markets
there is lot of sales information like clothing retail, food retailing etc.
The position of the product in its life cycle.-
Short term forecasting- It is maximum of three months and is often
effective for analyzing budget and market.
Intermediate sales forecasting.-it is between a period of two months and
three years and may be used for schedules, inventory and production.
Long term forecasting.-It is minimum for two years and is good for
dealing with growth into new markets or new products.
Factor Affecting sales Forecasting
I. Conditions within the industry
II. Conditions within the Company
III.General economic condition
IV.Market conditions
V. Business competence
Objectives of sales forecasting
objectives of sale
forecasting
Short –term Long –term
objectives objectives
Short –term Objectives
To make provision for regural supply of raw-material
To reduce the cost of purchasing raw- material
To achieve best utilization of machines
To arrange regular availability of labour
To formulate suitable product policy
To determine appropriate price policy
Long – term Objectives
To plan the plants capacity as per the
demand
To plan a new unit or to expand an
existing unit
To estimate cash inflows
To achieve budgetary control
For proper manpower planning
To determine dividend policy
Importance of Sales Forecasting
Following is the importance of sales forecasting
1)It helps in estimation of future sales.
2)It will guide the procurements.
3)Sales forecasting provides base for others
marketing decisions.
4)It helps in determining marketing plans,
growth strategies etc.
5)It helps the manager to decide the basis for
sales quota to different segments and zone.
Evaluation of Forecasts
They should evaluate the forecasting methods
objectively asking such question as :Are there
any variations here from what past experience
would seem to indicate?
Trends in the competitive situations and of chances
in competitors marketing and selling strategies?
Forecasts should be checked against actual result,
differences explain, and indicated adjustment
made for the reminder of periods.
THANK YOU
