Sales Management

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Sales Management
Sales Forecasting Topic 13
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Sales Forecasting

• What is it?
• Why do it?
• Qualitative vs Quantitative
• Goal Accuracy
• Commonly Done by Marketing

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Forecasting Overview

• Hard to do, but must be done
• Shorter Time Frames are more accurate
• Harder for New Products
• No Substitute for Actual Demand
• Done for Each Product, Territory, ..
• Multiple Methods often used

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Goal is.

• Accuracy
• Accuracy
• And
• Accuracy

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Mean Absolute Error (MAPE)

• Why Mape (or MSE)?
• All past forecasts
• Does not control for external shocks

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Patterns

• Trend
• Seasonality
• Cycle
• Outliers

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Market Potential

• Buying Power Index
• NAICS
• Trade Press
• Chain Ratio
• Leading Indicators

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Qualitative Methods

• Turning Points Shocks
• Sales Force Composite
• Jury of Executive Opinion
• Survey of Customer Buying Intentions

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Quantitative Methods

• Strong Weak Points
• Seasonal Adjustments
• Naïve
• Moving Averages
• Exponential Smoothing
• Other Methods

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Naïve Method

• Previous Period Forecast
• More Accurate than you think

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Moving Averages

• 2PMA
• 3PMA
• Ex 2PMA
• t1 100
• t2 150
• Forecast 125

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Exponential Smoothing

• 2 Formulas
• Usually High Alpha (why done)

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Exponential Smoothing Example

• Alpha 0.9
• 2020 1000
• 2021 1200
• 2022 1100
• 2022 forecast .9 (1200) .1 (1000) 1180
• 2023 forecast .9 (1100) .1 (1180) 1108

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Regression

• Dependent vs Independent Variables
• Can you get data?
• Better than using dependent variable alone?

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Trend Projections

• Why Done
• Problems With

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Most Firms Use gt 1 Method