2.2.1 Sales forecasting

Question 1

Definition Sales forecast

Answer 1

estimates the volume/value of future sales using market research of post sales data

Question 2

purpose of sales forecasts

Answer 2

1. avoid cash flow problems
   helps manage business more effectively
   helps with income part of cashflow
2. free up management time
3. manage produciton
4. employ more workers
5. start promotional activity
   sales forecasted lower promotions
   direct to specific season

Question 3

affecting factors to sales forecasts

Answer 3

consumer trends
–> reports of Mintel, fashion shows, trade fairs, market research help business identify upcoming trends
economic variables
–>e.g. interest rate, inflation, GDP
action of competitors
–> your sales decline because competitors product

Question 4

difficulties of sales forecasting

Answer 4

no guarantees that sales will meet the predicted levels because of e.g. external shocks
dynamic markets
short term tinking
–> useful when business produce and selll products in 1 year period same businesses (hotel) not appropriate