4.3 - Sales Forecasting

Question 1

what is sales forecasting

Answer 1

predicting the sales volume of a product in the future

Question 2

what are methods of sales forecasting

Answer 2

• extrapolation (quantitative)
• correlation (a link between two factors)
• market research
• qualitative (own experience)

Question 3

what factors may affect sales forecasting

Answer 3

• seasonal differences
• economic patterns over time (fluctuations)

Question 4

pros of sales forecasting

Answer 4

• helps business predict the stock required for the future
• supports HR planning (expansion - do more people need to be hired?)
• expected profits - important for investors
• operations planning: the rate of sales will affect the rate of production and the whole operations line
• marketing decisions

Question 5

limitations of sales forecasting

Answer 5

• may be inaccurate
• may be influenced by external factors (eg. covid)
• some industries change very quickly
• new businesses wont have past sales numbers