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MANAGING SALES ANDDISTRIBUTION

SALES FORECASTING

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

CJ-SLIM-12.05.2013

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Salespeople underestimate how much theyspend and overestimate how much they sell

Andy Cohen,Sales & Marketing Management,October 1996

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DEFINITION OF FORECASTING

A planning tool that helps management in itsattempts to cope with the uncertainty of thefuture relying mainly on data from the pastand present and analysis of trends www.businessdirectory.com

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Projection of achievable sales revenue, basedon historical sales data, analysis of marketsurveys and trends and sales persons estimates www.investopidia.com

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Why is forecasting important?

Demand for products and services is usuallyuncertain .

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

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Some general characteristics offorecasts

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.

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Sales Force Planning

Companys strategic Planning

Overall Company Planning(Corporate Planning)

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SALES FORECASTING ANDSTRATERGIC AND OPERATIONAL

PLANNINGBudgeting

Operational Planning

Forecasting

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MARKET POTENTIAL & SALESPOTENTIAL

Market Potential

Total expected sales of a given product orservice for the entire industry in a specificmarket over a stated period of time

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Main four elements of Market

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

- Sales for the entire industry in value orproduct units

- A specific time period

- A Specific market(Geographically by type of customer or both)

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Sales Potential

Maximum share of market potential that an

Individual can reasonably expect to achieve

- Market potential and sales potential are equal in thecase of a monopoly

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SALES FORECAST

Sales Forecast is an estimate of sales that anindividual firm expects to achieve during aspecified forthcoming time period in a statedmarket and under a proposed marketing plan

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ESTIMATING MARKET AND SALESPOTENTIAL

Three fundamental techniques

- Market factor derivation- Surveys of buyer intention Customer Analysis

- Test markets

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CUSTOMER ANALYSIS

Is to determine who will use the product andto identify all possible characteristics of thoseusers

- Household users/Industrial users- Demographic : Age,sex,marital status- Buying habits- Price

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MARKET FACTOR DERIVATION

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

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SURVEYS OF BUYER INTENTIONS

The survey of buyer intentions technique fordetermining potentials consists of contacting

potential customers and questioning themabout whether or not they would purchase the

product or service at the price asked

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TEST MARKETS

Involves introducing and marketing a new product in a market that is similar to thecompanys other markets

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TERRITORY POTENTIALS

Identify the potential among the variousterritorial divisions

- Market Index

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

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FACTORS INFLUENCING THE SALESFORECAST

Marketing Plans

Conditions within the industry Market conditions General Business conditions

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Marketing Plans

Any changes in the price structure,channels ofdistribution,promotionl plans,products orother marketing policies which influence

future sales

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Conditions within the industry

Changes happening in the industry

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Market Conditions

The Basic changes happening in the primarydemand for the industrys output

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General Business Conditions

Major influencing factors in future salesdevelopment

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