Theme 2 - 2.2 Flashcards
What is Sale forecasting?
Sales forecasting is a range of techniques and information to predicting sales volumes and values.
What are the approaches on sales forecasting?
Market research like market reports and customer surveys.
Backdata like time series analysis, economic forecasts.
What are economic variables?
Economic variables combines to influence the level of demand and leads to sales in a market.different markets respond differently to economic variables.
What are some economic variables?
Interest rates
Unemployment
Exchange rates
Economic growth (GDP)
What are consumer changes?
Consumers change there taste, preferences and trends in a short period of time so business need to adapt to consumers needs and wants.
What are factors of consumer trends?
Seasonal variations - sales vary depending on season or even days of the week.
Fashions - fashions constantly change and can be very difficult to carry out accurate sales forecasts.
Long term trends - fashion may change from season to season but most consumer behaviours change over a longer period of times e.g solar powered energy.
What does competitors have to do with sales forecasting?
Business will adjust their sales forecasting based on the actions of their competitors.
What are the limitations and problems of sales forecasting?
Volatile customer tastes and preferences.
Fluctuations in economic variables - unforeseen external shocks like changing commodity prices.
The data used - quality of the data a business may use vary considerably.
Volatile markets - some markets are unpredictable then others.
Subjective expert opinions.
What is volume of sales?
Volume of sales is sometimes difficult for a business to calculate. E.g restaurants will use number of meals sold whereas car manufacturer will use the number of cars sold.
What is sales revenue?
Revenue is the value of sales made during a trading period, also includes products sold on credit and those sold for cash.
What are variable costs?
Variable costs that change directly with the level of output or sales e.g materials/wages.
What are fixed costs?
Fixed costs are those that do not change with the level of output or sales e.g. rent.
What is short run and long run?
Short run refer to the immediate future. Variable cost are variable and fixed costs are fixed but in the long run all costs are variable. This is because some fixed costs will eventually may fall e.g utility costs, others will rise like mortgages sorts or employee salaries.
What is average costs/unit costs?
Average/unit costs is the cost per unit of production, the unit cost will determine the profit margin?
What is the average/unit costs calculation?
Average cost = total cost/output
