Techinques of Sales Forecasting

Presented by :
Ojas Maheshwari

🎃 Apoorva Gupta
Himanshu Mishra
Neha shivhare
What is Sales Forecasting?
• A sales forecast is a projection of the expected customer demand for
products or services at a specific company, for a specific time
horizon, and with certain underlying assumptions
• Essential tool used for business planning, marketing, and general
management decision making.
• Sales forecasting can help you achieve sales goals.
• Sales forecasting can help drive sales revenue, improve efficiency,
increase customer retention and reduce costs.
 “
Why do we do sales
forecasting???
Factors affecting sales forecasting
 Economic factors
 Consumer factors
 Competition factors
 Changes within firm
 Marketing efforts
 Labour problems
 Techniques
✘ Qualitative ✘ Quantitative
 Executive Opinion Method  Projection of Past Sales
 Delphi Method  Time-series analysis
 Sales force Composite Method  Moving Average method
 Survey of Buyer’s Intention  Exponential smoothing
 Regression Analysis
(1) Jury of executive opinion:

Panel charged with developing a sales forecast. The group has

executives from different departments like marketing, sales, marketing
research, finance, production, operations etc.

Each member is asked to provide an estimate of future sales with

written justification. The opinions are then pooled and analyzed at group
meetings. The advantage is its simplicity, but might take too much time of the
executives involved.
(ii) Delphi Technique

• Group of experts used to make long-range projections.

Issues like future direction of business conditions, business activities,
technology, new product development, and market conditions.
These experts are kept apart from each other so that their opinions are
established independently.

• They prepare individual forecasts, which are then compiled and then
given back to them for a second round of projections.

This process continues until a consensus forecast of the future emerges.

The Delphi technique has the advantage of eliminating the group pressures
of a typical committee meeting.
(iii)Sales Force Composite

• Forecasts arrived at by combining salespersons estimates of expected

sales for their respective territories.
• Field sales people should be motivated to accept sales quotas when they
know that the information they supplied played a major role in
forecasting.

A major disadvantage is that sales people might be a poor judge of future

sales level or market conditions. They can have bias opinions as well.
(iv) Survey of Buyer’s Intention

Forecast survey of a limited and well-defined group of buyers. This is

when the potential customers are well defined and limited in number,
such as industrial products.

Disadvantage is that a customer might not always do what they

say and they plan to do. Secondly customer-buying behavior might alter
in response to change in the operational environment.
TOO MUCH THEORETICAL !!!!

Let’s Dive in
Quantitative
 Quantitative Techniques

✘Projection of past sales – technique that attempts to project the last

increment of sales change into the future.

✘Time series analysis – projection of the average increment of sales

change into the future. A time data series is determined by four basic
elements of sales variations (a) trends or long run changes (b) cyclical
changes (c) seasonal variations (d) irregular variation.
 Quantitative Techniques

✘ Moving Average method-The sales results of multiple prior periods are

averaged to predict a future period Called ‘moving’ because it is continually
recomputed as new data becomes available, it progresses by dropping the
earliest value and adding the latest value.
 Quantitative Techniques

✘Exponential smoothing – a weighted average time series analysis. Actual sales

of recent periods are weighted more heavily then the average sales of earlier
periods.
NYS= a (TYS)+ (1-a) (TYF)
where a= smoothing constant (0.0-1.0)
ex:-Actual sales=320, Sales forcast=350, a=0.3,
NYF=(0.3)(320) + (1-0.3)(350) = 341 units of products
✘Regression Analysis:- Regression analysis is a statistical process and, as used
in sales forecasting, determines and measures the association between
company sales and other variables.
 thanks!

😂 Any questions?