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23 May 2016

Sales Forecasting

     Sales forecasting plays an important role in the process of efffective marketing planning. Business, by nature, has an element of un certainity which give risk to risk. The risk can not be altogether eliminated but through planning and budgeting it can be reduced to a minimum level. Sales forecasting is also a step in this direction. Sales forecasting is the most important aspect of the Budgeting process. It is not only the commencement of sales budgeting but of budgeting as whole. In the words of J. Batty. "For many types of Business, the sales forecast is the commencement of budgeting. The quality of the company's product which can be sold may be the principal budget factor, and therefore, it is around this that the system revelves. When demand is assured, selling is principally a matter of producing as much as possible at the right price". Hence, sales forecast must be made after careful analysis and estamination of internal and external circumstances.

     According to American Management Association, An estimation of sales in dollars or physical units for a specified future period under a proposal marketing plan or programme and under an assumed set of economic and other forces outside the unit for which the forecast is made.


      There can be no effective business planning with out estimates of sales. Sales forecast or demand forecast is the starting point in customer - oriented business planning. It is also useful when planning the quantity to be purchased or manufactured, when and what should be bought or manufactured, when the amount to be spent and on what promotional activities and for preparing the marketing budget. Forecasting is no  doubt a precarious affair because it involves prediction of the future events when many of them are uncomtrollable i.e., the weather, competitive behaviour and govt. activity, There are, however, controllable determinants such as product quality, price, advertising, distribution and service,. As a planning premise, it is regarded a key to interna business planning. It is only on the basis of sales forecast that business and capital outlays and various policies are formaulated and finalised.


     Forecasting future demand is the first step in planning for production or in planning for sales in the market we need a demand estimate for the future in production as well as in sales or marketing planning., some basic sales forecasting methods;-

  • Executive Opinion
  • Expert Opinion
  • Dephi Method
  • Sales Force Composite Mothod
  • Survey of Buyer's Method
  • Market Test Method
  • Market Share Method
  • Market Survey Method
  • Analytical Method
  1. Time series analysis
  2. Correlation analysis
  3. Regression analysis
  4. Extropolation method
  5. Exponential smoothing
  6. Complex Econometricc models
  7. Moving average methods.

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