Sales forecast is an estimate of sales, in monetary or physical units, for a specified future period under a chosen marketing plan or programme.
Preparing a sales forecast: The preparation of a sales forecast requires
The availability of information on the product and industry sales.
Recognition of product sales determinants.
Prediction on the behaviour of market forces under forecast period.
Use of suitable procedure for forecasting.
The firms market share objectives.
Information needs for a sales forecast:- The information required for a sales forecast should cover:
An assessment of the total market size and trends including foreign markets.
Innovations which may have an impact on the market
An evaluation of the market share obtained and the competitive strengths.
The criteria on which purchase decisions are likely to be made.
The level of sales needed by the company and the profit to be generated
The image of the company in the market.
Assessment of factors within the company which will influence sales levels.
Product sales determinants:- The major determinants of product sales relating to different types of goals are:
Consumer Non-durable Goods:-
The factors that determine the sales of relatively low priced, short shelf life and frequently purchased consumer goods are;
Disposable personal income of the customer
Demographic characteristics: Helps in the selection of preferred market segments
Price levels of a product: This is relative to the disposable income of the customer. It also affects the quality level of the products to be purchased.
Consumer durable Goods:- These goods have a durable life. Purchase is limited to once or twice in the life of household. It is influenced by:
Discretionary income (disposable income minus essential expenditures on basic necessities and other fixed obligations) level of the population.
Availability of infrastructure and support facilities for the product usage in the country such as pucca roads, media and electricity in the case of various electrical appliances.
Available Price, credit or hire-purchase facilities.
Industrial Goods:- The industry products sales forecast is influenced by a
company’s forecast
industry forecast
National economic forecast d) world economic forecast.
Approaches to sales forecasting:- There are two approaches to sales forecasting at the level of the firm —
Break down approach: - The head of the marketing function initially develops a general economic and market sales potential for a specific period from which the firm’s sales potential is understood. This approach is less time consuming & costly.
Market build-up Approach: - The task of sales of the product begins by first estimating the sales at the product, product lines, customer groups or geographical area level. Estimates are then aggregated and reviewed as per the firm’s, objectives, available resources as well as competitor’s activities. This approach has practicality and consistency.
Uses of sales forecast Estimates of sales revenue can be used for the following purposes:
Participants