What Is Sales Forecasting Marketing Essay

What Is gross gross gross gross gross sales prodigy Marketing EssayForecasting is a little more than scientific than looking into the crystal freak . The scientific basis of presage lies in studying past times , beat and future trends , present and future actions and their effects . What happened in the past is applicable to what is happening now and what could happen in the future .Forecastingis be as the process of making statements ab protrude(a) the events whose actual outcomes have not yet been observed . A common model might bethe estimationof some variable of interest at some specify future date .Predictionis similar , but it is more widely distributed destination. Both might refer to formal statistical methods employing the time serial ,cross sectionalorlongitudinalselective study and alternatively to little formal judgemental methods . Usage tail end differ between atomic number 18as of application for example inhydrology , the terms calculate an d forebode be somemultiplication reticent for the estimation of values at certain specificfuturetimes , while the term prediction is utilize for more command guesss , much(prenominal) as the number of times the floods will occur over a long period .WHAT IS sales FORECASTING ?SALES FORCATING gross revenue soothsaying is estimating what a companys future gross revenue ar likely to be , establish on the sales records as rise up asthe food merchandise place look into . Information used for sales fortune telling must be well organized and may include cultivation on the competition and the statistics that view the telephone circuites customer base . Companies conduct sales forebode in hopes of identifying the patterns so that the revenue and the cash flow drop be maximized . gross sales forecasting is a difficult area of management . Most managers believe that they are good at forecasting . However , forecasts made usuall(a)y influence out to be wrong . Marketers a rgue about whether sales forecasting is a science or an art . The short answer is that it is a bit of both. Sales forecast should be conducted regularly and all the forecasting results rent to be measured , so that the future methods squeeze out be even outed if necessary .Before the forecasting process begins marketing , sales or former(a) managers should determine how far ahead the forecast should be done . Short term forecasting is a maximum of deuce-ace months and is often effective for analyzing figures and markets . Intermediate sales forecasting is between a period of three months and two years and may be used for schedules , size up and production . Long term forecasting is for a minimum of two years and gouge be used for long term forecast period and is good for dealing with growth into new markets or new products .Basically sales forecasting is analyzing all the parts of a business from broad(a) inventory to the strengths and weaknesses of sales people . Managers m ust study about changes in customer sales or other changes that could touch on the forecasting figures . They must be competitive when they are assessing the competition and how they can surpass the competition to better meet the needs of the target market .IMPORTANCE OF SALES FORCASTINGSales forecasting is the basis of all the business activities . All the business activities may it be a sales associate matter , production related matter , finance , advertising etc imagine on sales forecasting . Any business theatre starts its plan with sales forecasting . Sales forecasting is a self sagaciousness tool for a company . A sales forecast reports , graphs and analyzes the nerve impulse of any business . It is a vital basis for a companys budget . The future direction of the company depends on the sales forecasting .Salesare the lifeblood of the business .Its what dishs you pay employees , cover operating expenses , buy more inventory , market new products and attract more inve stors . Sales forecasting is a crucial part of thefinancial planningof the business . Its a self assessment tool that uses the past and the current sales statistics to intelligently predict the future performance .Sales forecasts are also an grievous part of starting a new business . Al more or less all new businesses need loans or start up capital to bargain for everything necessary to get off the ground office space , equipment , inventory , employee salaries andmarketing . You cant just walk into a bank with a bright idea and lots of enthusiasm . You need to show them verse that prove your business is viable . In other words , you need a business plan .The importance of Sales forecasting can be stated as follows 1 . Overstocking and the under stocking of materials can be maintained by a good inventory control.2 . With the help of sales forecasting , sales opportunities can be found out on the basis of the forecast .3 . All the activities in an disposal , are controlled on th e basis of forecasting .4 . Advertising and sales promotion expenses are found on sales forecasting .5 . Sales forecasting is also important in the world of power department . The number of sales persons , executives etc can be increased or decreased on the basis of sales forecasting .6 . Sales forecasting is the basis for financial Planning .7 . In the field of production , with the help of sales forecasting , producer is able to adjust his production schedules and avoid idle time which leads to efficiency .8 . summate and demand of the products can be easily adjusted .9 . It helps in knowing when and how much to buy .10 . It helps in the product salmagundi decisions .SALES FORECASTING ON THE root OF PASTMany businesses orchest roam their sales forecast on the basis of their past sales . preceding(a) years Sales forecasting is done with the help of Time serial analysis .Time series analysis involves the breaking of past sales down into the four components The trend are the sales growing , even lining or are in decline Seasonal or cyclical parts Sales are affected by the swings in the general economic military action . Seasonal and cyclical factors occur in a regular pattern .Erratic events these include strikes , fashion fads , war scares and other disturbances to the market , which need to be isolated from the past sales data in order to be able to identify the more blueprint pattern of the sales .Responses the results of the particular measures that have been taken to increase the sales (e.g. a major new advertising campaign) .Using the time series analysis to prepare an effective sales forecast requires the management to shine out the erratic factors .Adjust for the seasonal variation .Identify and estimate the effect of the specific marketing responses .SALES FORECASTING ON THE BASIS OF PRESENT MARKETAs a starting point for estimating the market demand , a company needs to know the actual manufacture sales that is taking place in the mar ket . This involves identifying its competitors and estimating their sales . An pains trade association will often collect and publish the total industry sales , although rarely listing the individual company sales separately .By using this information , each company can easily evaluate its performance against the whole market . This is an important particle of analysis , Say for example that Company A has sales that are rising at the rate of 10% per year . However , it finds out that the general industry sales are rising by the rate of 15% per year . This must mean that Company A is losing the market share , its relative standing in the industry .Another dash to estimate the sales is to buy the reports from a marketing enquiry firm much(prenominal) as AC Neilsen , Mintel etc . These are usually good sources of information for the consumer markets where the retail sales can be tracked in spectacular detail at the point of sale . Such sources are slight useful in the industr ial markets which usually rely on the distributors.SALES FORECASTING FOR FUTURE MARKETSo far we have place that how a company can determine the current position .How can the future market demand and the company demand be forecast ?Very few products or the services lend themselves to easy forecasting . These tend to involve a product whose absolute level or the trend of sales is fairly constant and where the competition is either non-existent ( e.g. monopolies such as public utilities ) or unchangeable ( pure oligopolies ) . In most of the markets , the total demand and company demand are not stable which makes the good sales forecasting a critical success factor .A common method of preparing the sales forecast has three stages determine the macroeconomic forecast what will happen to overall economic activity in the relevant economies in which a product is to be exchange .Prepare an industry sales forecast what will happen to overall sales in an industry based on the issues th at influence the macroeconomic forecast .Prepare a company sales forecast based on what management expect to happen to the companys market share .Sales forecasts can be based on the following three types of information What the customers sayabout their intentions to continue buying products in the industry .What the customers are actually doingin the market .What the customers have donein the past in the market .There are many market research businesses that undertake surveys of the customer intentions and sell this information to the businesses that need the data for sales forecasting purposes . The value of the customer intention survey increases when there are a relatively teeny number of customers , the cost of reaching them is small and they have the clear intentions . An alternative way of measuring the customer intentions is to smack the opinions of the sales force or to the consult industry experts .