business objectives and strategy - forecasting

Question 1

what is time series analysis?

Answer 1

enables informed decision making and accurate forecasting based on historical data. By understanding the past and predicting the future. Its aim is to uncover trends within the data due to cyclical, and seasonal variations

Question 2

what is a business able to do when it uses time series analysis?

Answer 2

• calculate 3 point moving averages
• extrapolate using a line of best fit to generate sales forecasts
• calculate the average variation and use this to adjust sales forecasts

Question 3

what are the limitations of forecasts in general?

Answer 3

• any forecasts used will only be as reliable as the data used to create it
• businesses should be careful when making assumptions based on the past
• older data is not as relevant and reliable and useful

Question 4

what are the uses of forecasting?

Answer 4

• business can estimate future sales ➡️ take action to improve their overall performance ➡️ plan for any additional resources in order to meet demand
• they can also use the estimate to ensure they don’t overstock ➡️ reduces working capital and costs

Question 5

define forecasting?

Answer 5

use of existing data to predict future trends. Businesses need to use forecasting so that they can make more plans for the future

Question 6

What can forecasts be made about?

Answer 6

• costs
• market size
• sales (most important)

Question 7

What are forecasts used to do?

Answer 7

• employ the right amount of staff
• makes the right operational decisions to meet sales forecasts
• ensure positive cash flow
• support new marketing strategies or the changes to marketing objective
• gather evidence to support a finance raising exercise

Question 8

what do marketing managers want to know?

Answer 8

• how big the market is and how fast it’s growing
• external factors that drive change in the market (social, economic)
• existing competitors
• customer needs and wants
• develop a competitive advantage

Question 9

define correlation?

Answer 9

looks at the strength of a relationship between two variables. Two types: independent and dependent

Question 10

define independent variable?

Answer 10

factor that causes the dependent variable to change

Question 11

define dependent variable?

Answer 11

variable that is influenced by the independent variable e.g. ice cream sales and hot weather

Question 12

what are the 3 types of correlation?

Answer 12

• positive
• negative
• none

Question 13

what is qualitative forecasting?

Answer 13

use views and opinions in reaching decisions about the future, these will often be based on previous experience or on a systematic collection of opinions from groups like consumers or sales staff