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SALES FORECASTING

HARSHAL
KOTHARI

Sales forecasting is an important
assessment tool that helps to
Regularly take the pulse of your
company get tips on effective
sales forecasting with helps
form a professional speaker
author and business consultant
who has been a real estate
broker , professional insurance
salesperson and financial
planner.

VIDEO

Real-Time Demand Drives Forecasting.mp4

Popular Method of Sales
Forecasting
Jury of Executive opinion Method
Delphi Method
The sales force Estimation Method
Time series Analysis Method

Jury of Executive opinion
There are two steps in this method
High ranking executives estimate

probable

sales
An average estimate is calculated
In the jury of executive opinion method of sales
forecasting, appropriate managers within the
organization assemble to discuss their opinions
on what will happen to sales in the future.
This method combines managerial experience
with statistical knowledge.

Companies using the jury of executive
opinion method do so for one or more of
four
reason:

This is a quick and easy way to turn out a forecast.
This is a way to pool the experience and
judgement of well informed people.
This may be the only feasible approach if the
company is so young that it has not yet
accumulated the experience to use other
forecasting methods.
This method may be used when adequate sales
and market statistic are missing ,or when these
figure have not yet been put into the form required
for more sophisticated forecasting methods.

EXAMPLE:
 Mainframe computer forecasting is done by

conducting a series of meetings between the
two mainframe analysts at a company, the
Service director, and a Research Operations
analyst. Typically, three or four meetings are
required in order to arrive at a forecast
consensus. In between meetings, the
forecasts are examined by colleagues, both
domestic and abroad, for feedback and
reaction.

Delphi Method
Several years ago researchers at the Rand corporation

developed a technique for predicting the future that is
called Delphi technique
Delphi method also gathers evaluates and summarizes

expert opinions as the basis for a forecast but the
procedure is more formal than that for the jury of executive
opinion method

Three Types of Participants
Decision Makers
Staff
Respondents

Steps in the Delphi method
Steps 1-  Various Experts are asked to answer, independently

and in writing, a  series of questions about the future of
sales or whatever other area is being forecasted.
STEP 2 – A summary of all the answers is then prepared. No

expert knows, how any other expert answered the questions.
  
                                               

 STEP 3 – Copies of summary are given to the

individual experts with the request that they modify
their original answers if they think it necessary.    
 STEP 4 – Another summary is made of these

modifications, and copies again are distributed to the
experts. This time, however, expert opinions that
deviate significantly from the norm must be justified
in writing.  
                                           
 STEP 5 – A third summary is made of the opinions and
justifications, and copies are once again distributed
to the experts. Justification in writing for all answers
is now required.
 STEP 6 – The forecast is generated from all of the

opinions and justifications that arise from step 5.

Sales Force Estimation
Method
The Sales Force Method is a sales forecasting

technique that predicts future sales by
analyzing the opinions of sales people as a
group

A sales forecast is an estimate of sales in dollars or

physical unit in future period under a particular marketing
program and assume set of economic and other factor out
side the unit for which the forecast is made.
 
The Sales Force Method is a sales forecasting technique

that predicts future sales by
analyzing the opinions of sales people as
a group.
Salespeople continually interact with customers,
and from this interaction they usually
develop a knack for predicting
future sales.

me Series analysis Method
Not greatly different in principle from the simple projection of past
sales is time series analysis a statistical procedure for studying
historical sales data
This procedure involves isolating and measuring four chief types of
sales variations long term trends cyclical changes seasonal variations
and irregular fluctuations
One drawback of time series analysis is that it is difficult to ‘’ call the
turns’’

Time Series analysis
involves
The time series analysis
method Predicts the future sales
by analyzing
The historical relationship between sales And time.

 Many businesses prepare their sales forecast on the basis of past

sales.
 Time series analysis involves breaking past sales down into four

components
(1)The trend: Are sales growing, flat or in decline.
(2) Seasonal or cyclical factors. Sales are affected by swings in general
economic activity (e.g. increases in the disposable income of
consumers may lead to increase in sales for products in a particular
industry). Seasonal and cyclical factors occur in a regular pattern
(3) Erratic events; these include strikes, fads, war scares and other
disturbances to the market which need to be isolated from past sales
data in order to be able to identify the more normal pattern of sales
(4) Responses: the results of particular measures that have been taken
to increase sales (e.g. a major new advertising campaign).

Reference
For a good of this see R. B. Miller and D .W

Wichern, intermediate Businees Statistics
P. E. Green and D.S. Tull, Research for
marketing decisions 4th prentice hall Page no
508-10
S.K. Mullick and D.D. Smith, ‘’how to
Choose the Right Forecasting Technique’’
Harvard Business Review 49 Page no 55-64

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