Sales Forecasting Flashcards
What is a sales forecast?
Projection of future sales revenue thats often based on previous sales data
What is the purpose of a sales Forecast?
to predict things with accuracy:
1.Future sales
2.effect of promotions on sales
3.possible changes in size of the market
4.The way sales fluctuate @ diff times of year
What technique can be used to predict future sales?
1.Time series analysis
2.Market research (reports/surveys)
What is time series analysis?
predicting future sales based on past sales figures, taking into account the trend and seasonal fluctuations
When is time series analysis most useful and what is it useful for?
when trading conditions are stable or short term
useful for raw materials, marketing ,capacity, staff, finance
What are the four components identified?
- trend
2.seasonal fluctuations
3.cyclical fluctuations
4.Random fluctuations
What factors affect sales forecasting?
1.consumer trends
2.economic variables
3. actions of competitors (hard to predict)
What are consumer trends?
behaviours of consumers that determine G&S they buy
what can consumer trends include?
- seasonal fluctuations
2.Fashion (constant change)
3.Long term trends (long term change)
What are economic variables?
measures within economy which have effects on business and consumers
What are some economic variables?
1.economic growth
2.inflation
3.unemployment
4.exchange rates
5.interest rates
What is economic growth?
rise in output of economy as measured by growth in GDP
what are consumer incomes?
amount of income remaining after taxes & expenses have been deducted from wages
what could be an evaluation point for economic variables?
rising incomes=higher sales however some businesses that sell at the lower end of quality goods, the opposite may be true eg lidle/aldi
What are the difficulties of sales forecasting?
1.volatile consumer tastes & preferences
2.significant changes in market share eg new entrants
3.new business so difficult to forecast
