Sales Forecasting (2.2.1) Flashcards
What is Sales Forecasting?
Predicting future sales and revenue to allow a firm to make appropriate decisions in the future
What does the sales forecast commonly focus on?
-Volume and value of sales
-The size of the market
-Sales as a result of promotional activity
-Sales as a result of cyclical factors
What can a Sales Forecast improve the validity of?
Cash Flow Forecasts
What does Sales Forecasting allow a firm to do?
-Employ the right amount of staff
-Accurately predict cash flow
-Accurately predict profit
-Buy the right amount of raw materials
-Find an appropriate location
What factors might affect sales forecasting?
Political-new election leaders
Economic- Economic Growth, Inflation, Unemployment, Interest Rates, Exchange Rates
Social (Trends)-Seasonal variations, Fashion, LT trends
Technological
Legal-laws
Environmental
Competition
What’s the most common way to forecast sales?
look at past sales trends
Why can Sales Forecasting not be that accurate?
This is because it involves the use of past data to predict the future and so in the Long-Term this can mean that several factors can affect its reliability. It also takes a lot of skill, time and accurate use of timely data
Why is sales forecasting not as good when you are a new business?
This is because if you are a new business its much less reliable as the predictions become less reliable as you don’t have any past data to compare to
Does the market being dynamic affect the prediction of sales?
Yes it makes it a lot harder to predict sales as the market is constantly changing
Is it better to have experience when sales forecasting?
Its much better to have experience when doing sales forecasting because then means they can understand trends, tastes and competitors more and how it will affect their sales
