Sales forecasting Flashcards
What is a sales forecast ?
A prediction of sales revenue based on historical number of sales made and current market research and trends
What is a budget ?
Estimate of income & expenditure covering a set period of time
What are 3 factors affecting sales forecasts ?
- Consumer trends
- Economic variables
- Actions of competitors
What are 4 disadvantages in sales forecasting ?
- New business have no historical info
- Prediction may change if significant technological change
- Consumers may be too cautious to do what they said they would
- New competitors may enter market after forecast
What is 3 types of qualitative sales forecasting ?
- Intuition
- Brainstorming
- The delphi method
What is intuition ?
Experienced manager makes an educated guess that sales may rise when quantitative data shows opposite
What is brainstorming ?
Group discussion produces ideas
What is Delphi method ?
Group of experts on the product provide their views on a range of issues
What are 3 advantages of qualitative forecasting ?
- Allows managers/experts to use experience
- Can be used when there is little historical data
- Can be beneficial where market is dynamic & changing
What are 3 disadvantages of qualitative forecasting ?
- Ignores wealth of data
- Bias
- Inaccurate & uncertain = no previous data
What is a moving average ?
One of a succession of averages of data, where each average is calculated by successively shifting the interval by the same period of time
What is a correlation ?
Explains data by linking one set of data with another
What are seasonal factors ?
Where products are only bought at one time in the year
What is forecasting by extrapolation ?
Predicting the future from the trend line
What is time series analysis ?
Allows businesses to predict future levels of sales from past figures
What are 2 advantages of time series analysis ?
- Historical data can be reliable in predicting future trends
- Seasonal fluctuations can be measured & compared
What are 3 disadvantages of time series analysis ?
- Quantitative = unreliable if fluctuations
- Assumes past trends with continue
- Ignores qualitative factors
