Sales forecasting(2.2.1)

Question 1

What is sales forecasting?

Answer 1

predict future revenues based on past sales figures

Question 2

Sales forecasting

Answer 2

the will observe what will happen to future sales in accordance with volume and value the size of the market for that product promotional activity and product life cycle factors

Question 3

How might a sales forecast be used?

Answer 3

stock-how much stock is required?
staff-how much staff is required?
capacity-does capacity need reduced or expanded?
choice of finance-how much and what type will be needed to finance these sales (to make them happen) e.g for advertising wages etc

Question 4

Sales forecast not useful

Answer 4

sales forecast may not be very useful as their accuracy will be lack there of:
economic changes
market trends
promotional activity
brand reputation

Question 5

Factors affecting sales forecasts

Answer 5

consumer trends
economic trends
actions of competitors

Question 6

Consumer trends-sales forecasting

Answer 6

seasonal variation
fashion
long term trends

Question 7

Seasonal variation (consumer trends) - sales forecasting

Answer 7

demand for certain goods is seasonal
e.g events such as major religious festivals holiday periods and annual event

Question 8

Fashion (consumer trends) - sales forecasting

Answer 8

often led by celebrities and their influence can have a short term impact on sales

Question 9

Long term trends (consumer trends) - sales forecasting

Answer 9

consumer behaviour attitudes and spending habits change over time
e.g environmentally friendly

Question 10

Economic trends-sales revenue

Answer 10

economic growth
inflation
unemployment
interest rates
exchange rates

Question 11

Economic growth (economic trends) - sales forecasting

Answer 11

during growth increased consumer incomes will lead to higher than forecasting sales
the opposite will occur during periods o economy slowdown and sales may be less than forecast

Question 12

Inflation (economic trends) - sales forecasting

Answer 12

general increase in prices over time reduces consumers spending power
e.g cost of living crisis

Question 13

Unemployment (economic trends) - sales forecasting

Answer 13

increased levels of unemployment are often experienced during periods of recession and tend to be a key cause of reduced spending in the economy

Question 14

Interest rates (economic trends) - sales forecasting

Answer 14

when interest rises borrowing becomes more expensive for consumers
businesses that sell products that consumers frequently buy on credit may therefore adjust their sales forecasts downward

Question 15

Exchange rates (economic trends) - sales forecasting

Answer 15

where the value of UK sterling falls against other global currencies overseas consumers will find British exports become relatively cheap
businesses that sell products overseas or cater to tourists visiting the UK may adjust their sales forecasts upwards to reflect the expected increase in demand for cheaper £

Question 16

Actions of competitors

Answer 16

sales forecasts should consider short term actions of competitors such as sales promotions as well as longer term strategies such as changes to product ranges and expansion plans
competitor actions are difficult to predict so the usefulness of past data to predict future sales may be limited