2.2.1 Sales forecasting

Question 1

What is Sales forecasting?

Answer 1

Sales forecasting is the predicting of future sales volume and trends

Question 2

What is the FINANCIAL purpose of Sales forecasting?

Answer 2

Inform cash-flow forecasts i.e. how much money can the business expect to flow in from sales
Predict sales volume and sales revenue
Assess ability to break-even
Help set budgets

Question 3

What is the MARKETING purpose of Sales forecasting?

Answer 3

Identify when promotional activity is needed e.g. before a potential peak or to avoid a dip
Plan distribution

Question 4

What is the PEOPLE purpose of Sales forecasting?

Answer 4

Sales team
Seasonal staff in stores or distribution
Peak times
Operatives to ensure supply meets demand

Question 5

What is the RESOURCE purpose of Sales forecasting?

Answer 5

Required levels of output
Stock management
Can suppliers match demand

Question 6

What are factors affecting sales forecasts?

Answer 6

Consumer trends
Goods come in and out of fashion
Difficult to predict what the next trend will be
Follow experts e.g. London fashion week as an indicator of short term fashion trends
Shopping habits
Online sales
Demographics
UK has an ageing population with high net migration

Question 7

What are some DIFFICULTIES in Sales forecasting?

Answer 7

By definition the future is unknown and therefore uncertain
Changing external environment
Unpredictable events
Time frame
Past is not a clear indication of the future
Lack of perfect information