Marketing Research

Pranab S Deb
PUMBA, Pune

Schedule of Lecture

Sales forecasting

A sales forecast is an estimate of sales, in dollars or physical units, in a future period under a particular marketing program and an assumed set of economic and other factors outside the unit for which the forecast is made

Forecasting methods
1.

Delphi technique

A panel of experts responds to a sequence of questionnaires in which the responses to a questionnaire are used to produce the next questionnaire

Forecasting methods
2.

Econometric model building and simulation

This approach uses an equation or system of equations to represent a set relationships among sales and different demand-determining independent variables. Then, by plugging in values (or estimates) for each independent variable (that is, by simulating the total situation), sales are forecast .. eg S = R + N (S: total sales; R: replacement demand; N: new-owner demand)

Forecasting methods
3.

Jury of executive opinion (2 steps)

a. b.

High-ranking executives estimate probable sales An average estimate is calculated

4.

Poll of sales force opinion

Often tagged as the grass-roots approach. Individual sales personnel forecast sales for their territories, then individual forecasts are combined and modified, as management thinks necessary, to form the company sales forecast

Forecasting methods
5.

Projection of past sales method

next year sales = this years sales x this years sales/last years sales
a. b.

Time series analysis Exponential smoothening: (a smoothening constant)

a.

Next years sales = a (this years sales) + (1 - a)(this years forecast)

c.

Evaluation of past sales projection method

Forecasting methods
6.

Regression analysis: (3 major steps)

a.

b.

c.

Identify variables causally related to company sales Determine or estimate the values of these variables related to sales Derive the sales forecast from these estimates

Forecasting methods
7.

Survey customers buying plans:

What more sensible way to forecast than to ask customers about their future buying plans?

Q&A

Thanks