Unit 3- Sales Forecasting

Question 1

Sales forecasting

Answer 1

This allows businesses to estimate their future sales

Question 2

Sales forecasting using Quantitive methods

Answer 2

This is used when there is historical data available. This is called extrapolation
* Time series analysis
* Use of market research data

Question 3

Sales forecasting using Qualitiative methods

Answer 3

This is used when there is no historical data avalibale. This involves the use of opinons to preidct future events
* The Delphi technique
* Brainstorming
* Intuition
* Expert opinion

Question 4

External factors that affect Sales forecasting

Answer 4

• Economic factors: Such as unemployment, inflation and interest rates. These would all reduce the accuracy of the forecast
• Consumer factors: Changes in taste and fashions are consantly changing and businesses try to anticipate these through market research
• Competiton factors: Competitors actions would affect presnt and future perfomance of a business. This could also affect accuracy

Question 5

Quantitative Methods

Time Series analysis

Answer 5

This uses evidence from past sales records to predict future sales patterns.
* Seasonal: Measured on a weekly or monthly basis to examine seasonality demand
* Trend: This focuses on long term data which has been collected over a number of years. This determines general tendacy of sales
* Cycle: Long term figures are used but now the objective is to exaime relationship between demand levels and economic activity
* Random: Attempts to explain how unusual or extreme sales figure occur

Question 6

Qualititative Methods

Brainstorming

Answer 6

This is used for generating new ideas and promote creative thinking usually between a group of people. This effective with groups of 6-12 people and a vairable group. All ideas are welcome and no judgements should be made

Question 7

Qualititative Methods

Intuition

Answer 7

The use of this is cheap and fast. There is no need for data gathering market testing. They may have a experience of exisisting markets and products. But gut feeling and experience should not be the only guide

Question 8

Qualititative Methods

Expert Opinion

Answer 8

These are used for useful specialised insights into likely future patterns and trends but should not be used on a standalone basis. Panel of experts are more reliable than consulting individual experts should also be combined with information from other sources

Question 9

Qualititative Methods

Delphi Technique

Answer 9

The members of a panel of experts repsond to qeustions and to each other until reaching agreements on issue.
* Qeustionnare conistsing of open ended qeustions
* Analysed summarised and fed back to group for reactions until agreement is met

Question 10

Qualititative Methods

Benefits/ Drawbacks Delphi Technique

Answer 10

Benefits
* Flexible enough to be used in a vairety of situations and can be applied to complex problems
* Provides a structured way of a group of people making descisions
* Ideas need to be thought about leading to better quality of awnsers
* Creates a record of expert group responses
Drawbacks
* Method would require a substaintial period of time to complete as it is time consuming
* Assumes that experts are willing to come to a consensus and allow their opinions to be altered
* Monetary payments may mean bias