MANAGING SALES AND DISTRIBUTION

SALES FORECASTING

Charitha Jayasinghe
MBA(UK),Practicing Marketer(SL),CPM(Asia),PGDip(SL),MSLIM,MCIM

CJ-SLIM-12.05.2013

Salespeople underestimate how much they spend and overestimate how much they sell
Andy Cohen,Sales & Marketing Management,October 1996

DEFINITION OF FORECASTING
A planning tool that helps management in its attempts to cope with the uncertainty of the future relying mainly on data from the past and present and analysis of trends
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Projection of achievable sales revenue, based on historical sales data, analysis of market surveys and trends and sales persons estimates
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Why is forecasting important?

Demand for products and services is usually uncertain. Forecasting can be used for

Strategic planning (long range planning) Finance and accounting (budgets and cost
controls)

Marketing (future sales, new products) Production and operations

Some general characteristics of forecasts

Forecasts are always wrong Forecasts are more accurate for groups or families of items Forecasts are more accurate for shorter time periods Every forecast should include an error estimate Forecasts are no substitute for calculated demand.

Sales Force Planning

Companys strategic Planning

Overall Company Planning (Corporate Planning)

SALES FORECASTING AND STRATERGIC AND OPERATIONAL PLANNING

Budgeting

Operational Planning

Forecasting

MARKET POTENTIAL & SALES POTENTIAL

Market Potential Total expected sales of a given product or service for the entire industry in a specific market over a stated period of time

Main four elements of Market Potential

- The item being marketed
(The product,service,idea,person ,location..etc)

- Sales for the entire industry in value or product units - A specific time period - A Specific market
(Geographically by type of customer or both)

Sales Potential
Maximum share of market potential that an Individual can reasonably expect to achieve
- Market potential and sales potential are equal in the case of a monopoly

SALES FORECAST
Sales Forecast is an estimate of sales that an individual firm expects to achieve during a specified forthcoming time period in a stated market and under a proposed marketing plan

ESTIMATING MARKET AND SALES POTENTIAL

Three fundamental techniques - Market factor derivation - Surveys of buyer intention Customer Analysis - Test markets

CUSTOMER ANALYSIS
Is to determine who will use the product and to identify all possible characteristics of those users - Household users/Industrial users - Demographic : Age,sex,marital status - Buying habits - Price

MARKET FACTOR DERIVATION

Method for determining the size of a potential market begins with a market factor

SURVEYS OF BUYER INTENTIONS

The survey of buyer intentions technique for determining potentials consists of contacting potential customers and questioning them about whether or not they would purchase the product or service at the price asked

TEST MARKETS
Involves introducing and marketing a new product in a market that is similar to the companys other markets

TERRITORY POTENTIALS
Identify the potential among the various territorial divisions

- Market Index Is a market factor, expressed as a percentage or in some other quantitative form, relative to some base figure

FACTORS INFLUENCING THE SALES FORECAST

Marketing Plans Conditions within the industry Market conditions General Business conditions

Marketing Plans
Any changes in the price structure,channels of distribution,promotionl plans,products or other marketing policies which influence future sales

Conditions within the industry

Changes happening in the industry

Market Conditions
The Basic changes happening in the primary demand for the industrys output

General Business Conditions

Major influencing factors in future sales development