30. Sales Forecasting Flashcards
Most popular technique used to predict future trends
Time series analysis
Components a business wants to identify in time series data:
- The trend
- Seasonal fluctuations
- Cyclical fluctuations
- Random fluctuations
Benefits of sales forecasting:
- Forecasts inform cash flow predictions
- Allow the business to pland orders of suppliers and components
- Enable the business to ensure it has the correct staffing levels for the predicted sales
- Enable the business to ensure that it has the capacity to meet the predicted orders
Factors affecting sales forecasting:
· Consumer trends:
- Seasonal variations
- Fashion
- Long-term trends
· Economic variables:
- Economic growth
- Interest rates
- Inflation
- Unemployment
- Exchange rates
· Actions of competitors
- Pricing
- Promotion
Difficulties of sales forecasting:
- Volatile consumer tastes and preferences
- Range of data
- Subjective expert opinion
Consumer income
The amount of income remaining after taxes and expenses have been deducted from wages
Consumer trends
The habits or behaviours of consumers that determine the goods and services they buy
economic growth
the rise in output of an economy as measured by the growth in Gross Domestic Product (GDP) usually as a percentage
Economic variables
measures within the economy which have effects on business and consumers. Examples include unemployment, inflation and exchange rates
Extrapolation
Forecasting future trends based on past data
Forecasting
A business process, assessing the probable outcome of using assumptions about the future
Sales forecast
Prediction of the future sales revenue, often based on previous sales data
time series data
A method that allows a business to predict future levels from past figures
