Sales Potential

&
Sales Forecasting
Presented by Akhileshwar Vasudev
Sales Potential &
Sales Forecasting
Sales potential refers to the maximum amount of sales a company can achieve within a specific market under ideal
conditions. It is influenced by various factors such as market demand, competition, economic conditions, and the
company's marketing efforts. Understanding sales potential is crucial for businesses to set realistic sales targets,
allocate resources effectively, and develop appropriate marketing strategies.

Sales forecasting, on the other hand, is the process of estimating future sales based on historical data, market
trends, and other relevant factors. It helps businesses anticipate demand, plan production, manage inventory, and
allocate resources efficiently. There are various methods and techniques used for sales forecasting, each with its
own advantages and limitations.
 Ideation process
Gather Historical Data:
Collect historical sales data for
the relevant time period. This
data should include sales
figures, as well as any other
relevant information such as
marketing activities, economic
indicators, seasonality, and
external factors affecting sales.
Preprocess Data:
Clean and preprocess the
historical data to remove
outliers, correct errors,
and handle missing values.
This ensures the accuracy
and reliability of the
forecasting model.
Evaluate and Adjust:
Validate the Model: Compare the forecasted sales
Validate the forecasting figures with actual sales data as it
model using historical data becomes available. Evaluate the
not used in the model's accuracy of the forecasts using
development. This helps metrics such as mean absolute
percentage error (MAPE) or root
assess the accuracy and
mean square error (RMSE).
reliability of the model
Identify any discrepancies or
before using it to forecast
biases and adjust the forecasting
future sales.
model as needed to improve
Monitor and Update:
Continuously monitor
market conditions, customer
behavior, and other relevant
factors that may impact
sales. Update the
forecasting model regularly
to incorporate new data and
insights, ensuring that
forecasts remain accurate
and relevant over time.

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accuracy.

01 03
Define the Objective:
Select Forecasting Method:
Clearly define the purpose of
Based on the objective, available
the sales forecast. Whether it's
data, and the nature of the
to support strategic planning,
business, choose the most
budgeting, inventory
suitable forecasting method or
management, or resource combination of methods. This
allocation, having a clear could involve qualitative methods
objective helps in selecting
like expert judgment or
appropriate forecasting
quantitative methods like time
methods and focusing efforts.
series analysis, regression
analysis, or market share analysis.
05 07 09
Generate Forecasts: Communicate Results:
Develop Forecasting Model:
Apply the validated Communicate the
Build the forecasting model
forecasting model to forecasted sales figures,
based on the selected method.
generate forecasts for along with any insights or
For quantitative methods, this
future sales periods. recommendations, to
involves applying statistical
techniques to the historical Depending on the chosen relevant stakeholders
data to generate forecasts. For method, forecasts may be within the organization.
generated for different This ensures alignment and
qualitative methods, it may
time horizons (e.g., facilitates informed
involve gathering expert
monthly, quarterly, decision-making across
opinions or conducting market
annually). departments.
research.
 Product policies, Distribution policies & Pricing
policies
Product Policies: Product policies refer to the decisions and strategies related to the development, design, features,
branding, packaging, and positioning of products or services. These policies aim to create offerings that meet customer needs,
differentiate the company from competitors, and achieve business objectives. Key elements of product policies include:
Product Development: Deciding which products or services to develop or improve based on market demand, technological
advancements, and competitive landscape.
Product Design and Features: Determining the design, features, and specifications of the product to deliver value and
meet customer expectations.
Branding: Developing a strong brand identity through naming, logo design, brand messaging, and visual elements to create
differentiation and build customer loyalty.
Packaging: Designing packaging that protects the product, enhances its appeal, communicates its benefits, and
contributes to the overall brand image.
Positioning: Identifying the unique selling proposition (USP) of the product and positioning it in the market to target
specific customer segments and address their needs effectively.

Distribution Policies: Distribution policies involve decisions regarding the channels, intermediaries, logistics, and strategies
for distributing products or services to customers. Effective distribution policies ensure that products reach the target
market efficiently, cost-effectively, and in a timely manner. Key elements of distribution policies include:
Channel Selection: Identifying the most suitable distribution channels, such as direct sales, retailers, wholesalers,
distributors, e-commerce platforms, or a combination of these, based on factors like customer preferences, product
characteristics, and market reach.
Channel Management: Establishing relationships with channel partners, managing channel conflicts, and providing support
and incentives to intermediaries to ensure effective distribution and maximize sales.
Logistics and Supply Chain Management: Managing transportation, warehousing, inventory management, and order
fulfillment processes to streamline the flow of goods from production facilities to end customers.
Market Coverage: Determining the extent of market coverage, whether the product will be available in selective locations,
specific regions, or nationwide, based on market demand and company objectives.
Pricing Policies: Pricing policies involve decisions regarding the pricing strategy, pricing structure, pricing tactics, and pricing objectives for
products or services. Pricing plays a crucial role in determining profitability, market positioning, demand, and customer perceptions. Key
elements of pricing policies include:
Pricing Strategy: Choosing a pricing strategy, such as cost-based pricing, value-based pricing, competition-based pricing, or skimming
pricing, based on factors like cost structure, value proposition, market dynamics, and business objectives.
Pricing Structure: Setting the overall price level, as well as determining pricing tiers, discounts, bundles, and other pricing structures to
cater to different customer segments and maximize revenue.
Pricing Tactics: Employing tactics such as promotional pricing, psychological pricing, dynamic pricing, or price bundling to stimulate
demand, drive sales, and respond to competitive pressures.
Pricing Objectives: Establishing pricing objectives, whether it's maximizing profit margins, gaining market share, achieving revenue
targets, or enhancing perceived value, and aligning pricing decisions accordingly.
Effective product, distribution, and pricing policies are integral to achieving marketing objectives, building strong customer relationships, and
sustaining competitive advantage in the marketplace. These policies should be aligned with the overall business strategy, regularly reviewed
and adjusted based on market feedback and changing business conditions to ensure relevance and effectiveness.