Session 37 - sales forecasting

Question 1

What does sales forecasting closely link to

Answer 1

Marketing research, business planning, budgeting, market analysis, cash flow forecasting

Question 2

Define sales forecasting

Answer 2

Projection of future sales revenue, often based on previous sales data

Question 3

What is the purpose of sales forecasting

Answer 3

It allows managers to set sales targets. Accurate predictions can reduce uncertainty
and allow them to plan.

Question 4

What factors affect sales forecasting

Answer 4

Consumer trends, economic variables, actions of competitors

Question 5

Positives of sales forecasting

Answer 5

Plan ahead and avoid surprises

Ensure that there is capacity

Production department can plan output to meet
demand

Personnel dept. can plan staff numbers needed

Finance dept. can forecast cash-flow and profit and
loss and allocate budgets

Marketing dept. can measure sales performance
against targets (motivation)

Question 6

Limitations of sales forecasting

Answer 6

Past trends may not continue into the future

External influences - competitors actions, economic
recession, tastes and fashions change.

Market research could be flawed

Long term forecasts are harder to predict than short
term

A fast changing market is harder to predict

Over-estimating sales leads to unsold products