Sales Forecasting Methods

A sales forecasting method is a procedure for estimating how much of a given product (or product line) can be sold if a given marketing program is implemented. No sales forecasting method is foolproof – each is subject to some error. Some methods are unsophisticated, such as the jury of executive opinion or the poll of sales force opinion. Others involve the application of sophisticated statistical techniques, such as regression analysis or econometric model building and simula- tion. Two sales forecasting methods may be either sophisticated or unsophisticated, depending upon how they are used – the projection of past sales and the survey of customers’ buying plans.

Well-managed companies do not rely upon a single sales forecasting method but use several. If different methods produce roughly the same sales forecasts, then more confidence is placed in the results. But if different methods produce greatly different sales forecasts, then the sales situation merits further study.

The forecasting methods can be broadly classified as qualitative and quantitative.

Qualitative methods are:

• Jury of Executive opinion
• The Delphi Technique
• Poll of Sales force opinion
• Survey of customers buying plan

 Quantitave Methods

• Projection of Past Sales
• Time series Analysis – Moving Average Method
• Exponential smoothening
• Regression Analysis
• Econometric model building and simulation

Let us study Qualitative Methods in this lesson .Quantitative Methods are discussed in Next Lesson