{"id":20272,"date":"2024-04-27T06:06:40","date_gmt":"2024-04-27T06:06:40","guid":{"rendered":"https:\/\/essays.homeworkacetutors.com\/2024\/04\/what-is-sales-forecasting-marketing-essay\/"},"modified":"2024-04-27T06:06:40","modified_gmt":"2024-04-27T06:06:40","slug":"what-is-sales-forecasting-marketing-essay","status":"publish","type":"post","link":"https:\/\/www.colapapers.com\/us\/what-is-sales-forecasting-marketing-essay\/","title":{"rendered":"What Is Sales Forecasting Marketing Essay"},"content":{"rendered":"
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Forecasting is a little more scientific than looking into the crystal ball . The scientific basis of forecasting lies in studying past , present and future trends , present and future actions and their effects . What happened in the past is relevant to what is happening now and what could happen in the future .<\/p>\n

Forecasting\u00a0is defined as the process of making statements about the events whose actual outcomes have not yet been observed . A common example might be\u00a0the estimation\u00a0of some variable of interest at some specified future date .\u00a0Prediction\u00a0is similar , but it is more general term. Both might refer to formal statistical methods employing \u00a0the time series ,\u00a0cross sectional\u00a0or\u00a0longitudinal\u00a0data and alternatively to less formal judgemental methods . Usage can differ between areas of application \u2013 for example in\u00a0hydrology , the terms \u201d forecast \u201d and \u201cforecasting\u201d are sometimes reserved for the estimation of values at certain specific\u00a0future\u00a0times , while the term \u201d prediction \u201d is used for more general estimates , such as the number of times the floods will occur over a long period .<\/p>\n

WHAT IS SALES FORECASTING ?<\/p>\n

SALES FORCATING :<\/h2>\n

Sales forecasting is estimating what a company\u2019s future sales are likely to be , based on the sales records as well as\u00a0the market research . Information used for sales forecasting must be well organized and may include information on the competition and the statistics that affect the businesses customer base . Companies conduct sales forecasting in hopes of identifying the patterns so that the revenue and the \u00a0cash flow\u00a0can be maximized .<\/p>\n

Sales forecasting is a difficult area of management . Most managers believe that they are good at forecasting . However , forecasts made usually turn out to be wrong . Marketers argue about whether sales forecasting is a science or an art . The short answer is that it is a bit of both. Sales forecast should be conducted regularly and all the forecasting results need to be measured , so that the future methods can be adjusted if necessary .<\/p>\n

Before the forecasting process begins marketing , sales or other managers should determine how far ahead the forecast should be done . Short term forecasting is a maximum of three months and is often effective for analyzing budgets and markets . Intermediate sales forecasting is between a period of three months and two years and may be used for schedules ,\u00a0inventory and production . Long term forecasting is for a minimum of two years and can be used for long term forecast period and is good for dealing with growth into new markets or new products .<\/p>\n

Basically sales forecasting is analyzing all the parts of a business from total inventory to the strengths and weaknesses of sales people . Managers must think about changes in customer sales or other changes that could affect the forecasting figures . They must be competitive when they are assessing the competition and how they can surpass the competition to better meet the needs of the target market .<\/p>\n

IMPORTANCE OF SALES FORCASTING<\/p>\n

Sales forecasting is the basis of all the business activities . All the business activities may it be a sales related matter , production related matter , finance , advertising etc depend on sales forecasting . Any business firm starts its plan with sales forecasting . Sales forecasting is a self assessment tool for a company . A sales forecast reports , graphs and analyzes the pulse of any business . It is a vital basis for a company\u2019s budget . The future direction of the company depends on the sales forecasting .\u00a0<\/p>\n

Sales\u00a0are the lifeblood of the business .\u00a0It\u2019s what helps you pay employees , cover operating expenses , buy more inventory , market new products and attract more investors . Sales forecasting is a crucial part of the\u00a0financial planning\u00a0of the business . It\u2019s a self assessment tool that uses the past and the current sales statistics to intelligently predict the future performance .<\/p>\n

Sales forecasts are also an important part of starting a new business . Almost all new businesses need loans or start up capital to purchase everything necessary to get off the ground \u2013 office space , equipment , inventory , employee salaries and\u00a0marketing . You can\u2019t just walk into a bank with a bright idea and lots of enthusiasm . You need to show them numbers that prove your business is viable . In other words , you need a business plan .<\/p>\n

The importance of Sales forecasting can be stated as follows :<\/p>\n

1 . Overstocking and the under stocking of materials can be maintained by a good inventory control.<\/p>\n

2 . With the help of sales forecasting , sales opportunities can be found out on the basis of the forecast .<\/p>\n

3 . All the activities in an organization , are controlled on the basis of forecasting .<\/p>\n

4 . Advertising and sales promotion expenses are based on sales forecasting .<\/p>\n

5 . Sales forecasting is also important in the field of personnel department . The number of sales persons , executives etc can be increased or decreased on the basis of sales forecasting .<\/p>\n

6 . Sales forecasting is the basis for financial Planning .<\/p>\n

7 . In the field of production , with the help of sales forecasting , producer is able to adjust his production schedules and avoid idle time which leads to efficiency .<\/p>\n

8 . Supply and demand of the products can be easily adjusted .\u00a0<\/p>\n

9 . It helps in knowing when and how much to buy .<\/p>\n

10 . It helps in the product mix decisions .<\/p>\n

SALES FORECASTING ON THE BASIS OF PAST<\/p>\n

Many businesses prepare their sales forecast on the basis of their past sales .<\/p>\n

Past years Sales forecasting is done with the help of Time series analysis .<\/p>\n

Time series analysis involves the breaking of past sales down into the four components :<\/p>\n

The trend \u2013 are the sales growing , flat lining or are in decline !<\/p>\n

Seasonal or cyclical factors \u2013 Sales are affected by the swings in the general economic activity . Seasonal and cyclical factors occur in a regular pattern .<\/p>\n

Erratic events \u2013 these include strikes , fashion fads , war scares and other disturbances to the market , which need to be isolated from the past sales data in order to be able to identify the more normal pattern of the sales .<\/p>\n

Responses \u2013 the results of the particular measures that have been taken to increase the sales (e.g. a major new advertising campaign) .<\/p>\n

Using the time series analysis to prepare an effective sales forecast requires the management to :<\/p>\n

Smooth out the erratic factors .<\/p>\n

Adjust for the seasonal variation .<\/p>\n

Identify and estimate the effect of the specific marketing responses .<\/p>\n

SALES FORECASTING ON THE BASIS OF PRESENT MARKET<\/p>\n

As a starting point for estimating the market demand , a company needs to know the actual industry sales that is taking place in the market . This involves identifying its competitors and estimating their sales . An industry trade association will often collect and publish the total industry sales , although rarely listing the individual company sales separately .<\/p>\n

By using this information , each company can easily evaluate its performance against the whole market . This is an important piece of analysis , Say for example \u2013 that Company A has sales that are rising at the rate of 10% per year . However , it finds out that the overall industry sales are rising by the rate of 15% per year . This must mean that Company A is losing the market share , its relative standing in the industry .<\/p>\n

Another way to estimate the sales is to buy the reports from a marketing research firm such as AC Neilsen , Mintel etc . These are usually good sources of information for the consumer markets \u2013 where the retail sales can be tracked in great detail at the point of sale . Such sources are less useful in the industrial markets which usually rely on the distributors.<\/p>\n

SALES FORECASTING FOR FUTURE MARKET<\/p>\n

So far we have identified that how a company can determine the current position .<\/p>\n

How can the future market demand and the company demand be forecast ?<\/p>\n

Very few products or the services lend themselves to easy forecasting . These tend to involve a product whose absolute level or the trend of sales is fairly constant and where the competition is either non-existent ( e.g. monopolies such as public utilities ) or stable ( pure oligopolies ) . In most of the markets , the total demand and company demand are not stable \u2013 which makes the good sales forecasting a critical success factor .<\/p>\n

A common method of preparing the sales forecast has three stages :<\/p>\n

Prepare the macroeconomic forecast\u00a0 \u2013 what will happen to overall economic activity in the relevant economies in which a product is to be sold .<\/p>\n

Prepare an industry sales forecast\u00a0 \u2013 what will happen to overall sales in an industry based on the issues that influence the macroeconomic forecast .<\/p>\n

Prepare a company sales forecast\u00a0\u2013 based on what management expect to happen to the company\u2019s market share .<\/p>\n

Sales forecasts can be based on the following three types of information :<\/p>\n

What the customers say\u00a0about their intentions to continue buying products in the industry .<\/p>\n

What the customers are actually doing\u00a0in the market .<\/p>\n

What the customers have done\u00a0in the past in the market .<\/p>\n

There are many market research businesses that undertake surveys of the customer intentions and sell this information to the businesses that need the data for sales forecasting purposes . The value of the customer intention survey increases when there are a relatively small number of customers , the cost of reaching them is small and they have the clear intentions . An alternative way of measuring the customer intentions is to sample the opinions of the sales force or to the consult industry experts .<\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

Forecasting is a little more scientific than looking into the crystal ball . The scientific basis of forecasting lies in studying past , present and future trends , present and future actions and their effects . What happened in the past is relevant to what is happening now and what could happen in the future […]<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[6617,5820],"tags":[6619,6620,6621,6314,6618,6311],"class_list":["post-20272","post","type-post","status-publish","format-standard","hentry","category-do-my-homework","category-marketing","tag-acemyhomework","tag-affordable-online-college-homework-and-assignment-help-from-professional-tutors","tag-do-my-homework-market","tag-native-assignment-help-online-homework-writing-helper","tag-write-my-paper-masterra-essay-writing-service","tag-write-pages-in-a-page-paper"],"_links":{"self":[{"href":"https:\/\/www.colapapers.com\/us\/wp-json\/wp\/v2\/posts\/20272","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.colapapers.com\/us\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.colapapers.com\/us\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.colapapers.com\/us\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.colapapers.com\/us\/wp-json\/wp\/v2\/comments?post=20272"}],"version-history":[{"count":0,"href":"https:\/\/www.colapapers.com\/us\/wp-json\/wp\/v2\/posts\/20272\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.colapapers.com\/us\/wp-json\/wp\/v2\/media?parent=20272"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.colapapers.com\/us\/wp-json\/wp\/v2\/categories?post=20272"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.colapapers.com\/us\/wp-json\/wp\/v2\/tags?post=20272"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}