2.2.1 - Sales Forecasting Flashcards
What is sales forecasting, and why is it important for businesses?
Sales forecasting is predicting future sales volume and revenue based on past data and market research. It helps businesses make decisions about finance, marketing, and resources.
How does sales forecasting help with finance?
Sales forecasting helps generate accurate cash flow forecasts, which allow businesses to plan when they might need additional finance to prevent running out of cash.
How does sales forecasting help with marketing?
Sales forecasts help businesses plan marketing strategies. For example, if sales are predicted to decline, a business might launch a promotional campaign to boost sales and cash inflow.
How does sales forecasting help with resource management?
Sales forecasts help businesses ensure they have the right resources, such as staff, machinery, and raw materials, to meet demand without wasting money during low sales periods.
How can sales forecasting help businesses with seasonal demand?
Sales forecasting helps businesses identify seasonal peaks and adjust their resources, like hiring temporary staff or increasing production capacity, to meet the expected demand.
What are some external factors that can affect sales forecasts?
External factors include consumer trends, economic variables (interest rates, inflation, unemployment), and actions of competitors, all of which can impact sales predictions.
How do consumer trends affect sales forecasting?
Consumer trends, such as increased demand for products during holidays or changes in health perceptions, can impact sales forecasts, but some trends are more predictable than others.
How do economic variables like interest rates and inflation affect sales forecasts?
Changes in economic variables affect consumer spending, which in turn affects sales. For example, rising interest rates or inflation may reduce spending, while lower unemployment could increase demand for budget-friendly products.
How do competitors’ actions affect sales forecasting?
If competitors lower their prices or launch new products, it can reduce a firm’s sales, making it harder to accurately predict future sales.
Why is it difficult to make accurate sales forecasts in dynamic markets?
In dynamic markets, external factors constantly change, making it hard to predict how these factors will affect sales. Accurate forecasts are especially challenging over long periods of time.
How do changing external factors impact the accuracy of sales forecasts?
Changes in external factors like consumer behavior, economic conditions, and competitor strategies make it difficult to predict how these will influence sales, leading to less accurate forecasts.
