Sales Forecasting



The first bullet point should read 'Quantitative sales forecasting'.

Not as if exam boards ever get anything wrong.

What is your definition of 'marketing'?

Marketing

The action or business of promoting and selling products or services, including market research and advertising.

Cadburys has a ‘brand manager’ for each product within its portfolio.

How many different Cadbury products can you think of?

Each brand manager will focus on the likely future sales of the product they are responsible for.

Imagine this was your role for Creme Eggs (with a £60,000 salary, at least.)

What are the implications for Cadbury of a changing sales forecast for the products they make?

A sales forecast will have an impact on:

1. Investment decisions.

2. The number and type of staff that are required.

3. The four Ps (price, product, place & promotion).

Methods of forecasting sales:

For a new product Test Marketing may be used.

For an existing product a 'moving average' is a good way to smooth out fluctuations in sales to allow for a prediction of future sales. 

This is technically known as time series analysis.

How to calculate a 4 quarter moving average:

Year                       Sales

2006                       125

2007                       130

2008                       130

2009                       150

2010                       140

2011                       155

2012                       180

2013                       190

2014                       210

2015                       230

Calculate a 3 & 4 year moving average.

Drawing a line of best fit:

Limitations of quantitative sales forecasts:

No forecast can be 100% accurate.

Cyclical variations may occur.

Random variations may occur.

The longer the time period of the forecast the more uncertainty there is.

The forecaster should prepare a range of forecasts:

1. Optimistic

2. Pessimistic

3. A central forecast

Qualitative sales forecasting:

This may involve panel surveys (focus groups):