Chandigarh School

Of Business

Management Department

Master of Business
Administration
MBA-3rd Semester Sales
Forecasting
Marketing Analytics
MBA 961-18

Ms. Aayushi Mithu

Assistant Professor

CAMPUS: JHANJERI, MOHALI

 Today’s Agenda….

Sales Forecasting
Concept
Methods
Sales Forecasting

• Sales forecasting is the process of estimating future sales

based on historical data and various analytical
techniques. It's a crucial aspect of business planning and
decision-making as it helps organizations allocate
resources, plan production, set budgets, and formulate
marketing strategies. Accurate sales forecasts enable
companies to make informed decisions and respond
effectively to market changes.
Key Components and Methods
• Historical Data: The foundation of sales forecasting is historical sales data.
Analyzing past sales patterns, trends, and seasonality provides insights into
how your products or services perform over time.
• Quantitative Methods:
• Time Series Analysis: This method examines historical sales data to identify
patterns, trends, and seasonality. Techniques like moving averages, exponential
smoothing, and ARIMA (AutoRegressive Integrated Moving Average) are used to
forecast future sales based on these patterns.
• Regression Analysis: Regression models analyze the relationship between sales
and various independent variables such as advertising spend, pricing, and
economic indicators. These models can help predict how changes in these
variables might impact sales.
• Machine Learning: Advanced machine learning algorithms can be trained on
historical data to predict future sales. Techniques such as random forests, neural
networks, and support vector machines can be employed for more accurate
predictions.
• Qualitative Methods:
• Market Research: Gathering insights from customer surveys,
focus groups, and expert opinions can provide qualitative input
to sales forecasts. This method is particularly useful when
there's a lack of historical data or when entering new markets.
• Delphi Method: This involves seeking opinions from a panel of
experts in the industry. Their individual forecasts are compiled
and refined through a series of iterations to reach a consensus
forecast.
• Judgmental Forecasting: Involves the intuition and experience
of managers and sales teams to estimate future sales based on
their insights about the market.
• Data Analysis Tools:
• Statistical Software: Tools like Excel, R, and Python with
libraries like pandas, scikit-learn, and statsmodels can be used
to perform data analysis and build forecasting models.
• Business Intelligence (BI) Tools: BI platforms like Tableau,
Power BI, and QlikView can help visualize and analyze
historical data to identify patterns and trends.
• Scenario Analysis: Businesses often consider different
scenarios that might impact sales, such as changes in
economic conditions, competitive landscape, or
technological advancements. By modeling various
scenarios, companies can better prepare for
uncertainties.
• Adjustment and Review: Sales forecasts should be
continuously monitored and adjusted as new data
becomes available. Regularly comparing actual sales to
forecasted sales helps refine forecasting methods and
improve accuracy over time.
• Collaboration: Effective sales forecasting involves
collaboration between various departments such as
sales, marketing, finance, and operations. This helps
ensure that forecasts are based on a comprehensive
understanding of market dynamics.
Conclusion
• It's important to note that no forecasting method is
100% accurate, as external factors like unexpected
events, market shifts, and changing consumer behavior
can influence sales. Therefore, a combination of
quantitative and qualitative approaches, along with
ongoing evaluation and adjustment, provides the best
chance of creating reliable sales forecasts.