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Sales Forecasting Techniques Explained

This document presents information on sales forecasts in marketing. It defines sales forecasting as an estimate of the expected sales level of a company, product line, or brand over a specific period of time. It explains that sales forecasts are important for decision-making in marketing, production, procurement, and cash flow. Finally, it summarizes five common techniques for developing sales forecasts: executive judgment, surveys, analysis.

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7 views4 pages

Sales Forecasting Techniques Explained

This document presents information on sales forecasts in marketing. It defines sales forecasting as an estimate of the expected sales level of a company, product line, or brand over a specific period of time. It explains that sales forecasts are important for decision-making in marketing, production, procurement, and cash flow. Finally, it summarizes five common techniques for developing sales forecasts: executive judgment, surveys, analysis.

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Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd

Subject and section:

Marketing (Section 2)

Name of the tutor teacher:


Ricardo Rivera Alvarenga

First and last name of the student:


Jordan Alexander Morales Rivera

Account number:
120020043

Location where the student is enrolled:


Saint Lawrence, Valley

Title or topic of the work:


Marketing Forecasts, 'Sales Forecasts'

Delivery date:
Friday, June 17, 2022
Marketing Forecasts, 'Sales Forecasts'
Once marketers have estimated the company's demand or of the
product, they must choose a level of marketing effort that produces
a expected level of sales, which is known as the sales forecast.

What is Sales Forecasting?


A sales forecast is an estimate or expected level of sales of a
company, product line or product brand, that covers a period of
determined time and a specific market.
The sales forecast is based (or should be) on a plan of
marketing defined and in a supposed marketing environment.
Generally, the sales forecast is expressed in product units.
(physical units) and/or in monetary units (values).

What is the Importance of Sales Forecasting?


According to Stanton, Etzel, and Walker, when the forecast has been prepared
sales, affects all departments of the company. It is the foundation for
decide how much to spend on various activities such as advertising and sales
personnel. Based on the advance sales, the quantity is planned
necessary working capital, the use of the plant and the facilities of
storage. They also depend on these forecasts: the calendar of
production, the hiring of factory workers and the purchase of materials
cousins.
In summary, the sales forecast is of vital importance for executives.
from the company because it allows them to make marketing decisions,
production, supply and cash flow. Therefore, it should be prepared
with utmost care, setting aside excessive optimism or exaggeration
moderation, because they can seriously affect the company as a whole.

What is the Scope of the Sales Forecast?


Regarding the breadth and depth, it is advisable to develop a
sales forecast for each product (including each of the items or
presentations it has), product line and for the company in its
together, because in that way more accurate decisions can be made
especially regarding production, procurement, and flow of
box) and furthermore, better monitoring and control can be carried out at the time of
cross the results of marketing effort with compliance of
sales forecast.
Regarding time, typically, sales forecasts cover a
year. However, forecasts of less than a year are also made
when the activity in the industry in which the company participates is so volatile
that it is not feasible to make estimates for an entire year.
For example, many retailers and producers in the fashion industry
they prepare forecasts only for one season at a time, therefore, they prepare 3 or
4 forecasts per year.

Advantages of sales forecasting:


The sales forecast supports decision-making by the
Marketing, Sales, and Production management by providing them with information
congruent and accurate, which is calculated using mathematical models of
forecast, historical data on sales behavior and judgment of
the executive representatives of each involved department of the
company.
A sales forecast provides greater security in management of the
information related to the company's sales.
There is great flexibility in the preparation of forecasts and for the
creation and comparison of multiple scenarios for analysis purposes
projected sales.
The sales forecast supports the decisions of the Sales department.
in an effective and timely manner, when forecasting the guidelines of the
products and the demands established within the Master Plan of
Production.

Techniques for sales forecasting


The generally accepted techniques for forecasting
Sales are divided into five categories: executive judgment, surveys, analysis of
time series, regression analysis, and market tests.
1- Executive Judgment
This sales forecasting technique is based on the intuition of one or more
experienced executives related to stable demand products. Their
the disadvantage is that it is based only on the past and is influenced by the
recent events.
2- Surveys
Marketing surveys are one of the research methods for
to know the market and the customers. Through this tool it is possible
gather the opinion of people, to know, for example, if the audience
approve a product or service.
Although it may be a complicated job, they allow for acquiring a great amount of
solid knowledge that can help you take your business to the next level.
3- Time Series Analysis
For sales forecasting, historical sales data is used from the
company to discover seasonal, cyclical, and random trends or
erratic. It is an effective method for products with reasonably demand
stable.
4- Regression Analysis
In this sales forecasting technique, it is about finding a relationship
between historical sales (dependent variable) and one or more variables
independents, such as population, per capita income or gross domestic product
(GDP). This method can be useful when historical data is available that
they cover wide periods of time. It is ineffective for forecasting sales of
new products.
5- Market Test
To forecast sales with this technique, a product is made available to
the buyers in one or several test territories. Then the are measured the
purchases and the consumer's response to different marketing mixes.

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