2.2.1 Sales Forecasting Flashcards
What is sales forecasting
A projection of the number of goods/services that will be sold in the future, often based on previous sales data
Why are accurate sales forecast important to firms
Finance, operations and Human Resources
How does accurate sales forecasts effect finance
Allows cash-flow forecasts to be drawn up, helping the management of finances
How does accurate sales forecasts effect operations
Firms can plan orders of supplies as well as the manufacturing needs
How does accurate sales forecasts effect Human Resources
Firms can have the correct staffing levels for the projected sales
What are the 3 factors affecting sales forecasting
Consumer trends, economic variables, actions of competitions
How does consumer trends affect sales forecasting
The habits and behaviour of consumers around the products they buy and how they use them
What are consumer trends affected by
Seasonal variations, fashion, demographics
How does economic variables affect sales forecasting
Products affected by income level vs products not affected by income level.
What are major economic variables
Economic growth, interest rates, unemployment, taxation, exchange rates
How does actions of competitions effect sales forecasting
Strong competition leads to sales forecasts being reduced
The size of impact depends on the type of strategy use by competing firms
What are the difficulties of sales forecasting
Volatile consumer rates and preferences
Subjective opinion
Wide range of data
How is volatile consumer tastes and preferences a difficultie
Forecasting future sales based on past data is often used, once rates change this method is invalid
How is subjective opinion a difficultie
Company experts ultimately make final decisions on sales forecasts which can end up being wrong
How is having a wide range of data a difficultie
Worries of choosing the wrong figures to baser predictions on
