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Sales and Distribution Management

Sales forecasting methods can be qualitative or quantitative. Qualitative methods rely on subjective judgements while quantitative methods use statistical analysis. Short term forecasts for 3-6 months may use simple qualitative estimates, while long term forecasts for 3-5 years require more rigorous quantitative time series analysis of historical sales data to identify trends and patterns. Regression analysis is an example quantitative method that compares historical sales to influencing factors like number of sales calls to forecast future sales.

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35 views33 pages

Sales and Distribution Management

Sales forecasting methods can be qualitative or quantitative. Qualitative methods rely on subjective judgements while quantitative methods use statistical analysis. Short term forecasts for 3-6 months may use simple qualitative estimates, while long term forecasts for 3-5 years require more rigorous quantitative time series analysis of historical sales data to identify trends and patterns. Regression analysis is an example quantitative method that compares historical sales to influencing factors like number of sales calls to forecast future sales.

Uploaded by

Jehe Hwbs
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Sales and Distribution

ManagementTopic: Sales Forecasting


• According to Henry Fayol,

“To foresee,
means both, to
assess the future
and make
provisions for it.”
Forms of Forecast

Short

Term

Medium
Term Long

Ter
Short Term Forecast

Period: 3-6 months


Medium term
Forecast

Period: 6mnths-
2years
Long Term Forecasting

Period: 3-5years
METHODS OF SALES
FORECASTING
• Methods of sales forecasting vary from simple judgement or
subjective assessment to ratio analysis to more sophisticated
statistical or quantitative techniques. Generally speaking, the
longer the periods, the more rigorous or quantitative should
be the methods.
• Various methods of sales forecasting can be broadly
divided into two categories:
• A. Qualitative techniques
• B. Quantitative techniques
Qualitative techniques
• Qualitative techniques are essentially judgemental or
subjective techniques based on the personal assessment of
sales managers, industry experts or consultants. Companies
use one or more of five qualitative methods.
1. Expert Opinion
2. Delphi Techniques
3. Consumer Survey Method
4. Sales Force Estimate
5. Executive Method
Quantitative techniques
• Quantitative techniques of sales forecasts are statistical or
mathematical methods and are mostly based on time series
analysis. The methods from simple extrapolation of past trends to
more sophisticated regression analysis and computer models. We
discuss here four methods which are more commonly used :
1. Moving Averages
2. Sales Ratio Method/ growth rate method
3. Market Share Projection
4. Regression Analysis
5. Time series method
•Time series analysis and projection: involve historical
data, finding structure in the dynamics of the data like
cyclical patterns, trends and growth rates.
Time Series: models that predict future demand
based on past history trends
is a sequence of data points, measured typically at
successive times spaced at uniform time intervals. Time
series analysis comprises methods for analyzing time
series data in order to extract meaningful statistics
Moving averages Method:
In this method of forecasting, the moving averages of the company
sales of the previous periods are estimated for forecasting the sales of
the future periods. So, the sales forecast for the next year would be
determined by actual sales forecast for the past 3 or 6 years divided by
the number of years, which could be either 3or 6 years, and in this way,
based on the actual sales of the last 3 years or 6 years, based on data
which is available with the company, sales forecast for a company could
be determined.
Example of Regression Analysis Forecasting
Your business wants to forecast your sales for the upcoming summer program in
order to plan for your budget and figure out if you need to conduct a second
round of hiring for temporary sales reps. In this scenario, the sales team is the
dependent variable and your goal is to understand what influences it.

So, you compare the sales to an independent variable, like the number of sales
calls. Then you collect data for both the total seasonal sales and the total
seasonal sales calls for the last five years.

The goal here, again, is to compare what influences the number of calls had on
the number of sales.

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