Sales Forecasting

Question 1

What is a sales forecast?

Answer 1

An estimation of future sales that may be based on previous sales figures, sales volumes, trends, market surveys and trends or managerial estimates

Question 2

What is the purpose of a sales forecast in the financial aspect?

Answer 2

1. Inform cash flow forecasts - how much money a business can expect to flow in from sales
2. Predict sales volume and sales revenue
3. Assess ability to breakeven
4. Help set budgets
5. Profit and loss forecast

Question 3

What is the purpose of a sales forecast in the people aspect?

Answer 3

Plans workforce needs for:

1. Sales team
2. Seasonal staff in stores or distribution
3. Peak times
4. Operatives to ensure supply meets demand

Question 4

What is the purpose of a sales forecast in the marketing aspect?

Answer 4

1. Identify when promotional activity is needed
2. Plan distribution
3. Resource management
4. Required levels of output
5. Stock management
6. Can suppliers match demand

Question 5

What are the factors affecting sales forecasts?

Answer 5

1. Consumer trends
2. Economic variables
3. Actions of competitors
4. Natural changes
5. Change in costs

Question 6

What are the difficulties of sales forecasting?

Answer 6

1. Sales forecasts are based on past sales data so could be inaccurate for the future
2. The further ahead the forecasts are the more likely they are to be inaccurate
3. Inaccurate forecasts can cause problems for the business
4. Trends come and go quickly