Sales Forecasting

Topic: BusinessMarketing
Sample donated:
Last updated: March 10, 2019

What is sales forecasting? In general terms, forecasting means “A statement made about the future”. So, Sales forecasting is the estimation of sales made for the future. Sales forecast is an estimate of sales in rupees or in units for future period.

A sales forecast is the prediction of sales volume that a company can estimate to achieve in specified period of time in future. Following are some of the definitions given by different scholars: According to American marketing Association, “Sales forecast is an estimate of sales in dollars (Rupees in India) or physical units for a specified future period”.According to Matthew, Buzzles, Lovitt, Frank, ‘A sales forecast is an estimate of sales of a company’s product that are expected to be achieved during a given future period, in a given place’. Factors Affecting Sales Forecasting: Business Conditions The sales manager should be aware of all the business condition in a country may it economic, political or business conditions. The business conditions like population growth, government policies, fashion and style etc affect sales forecasting.

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The economic trends such as inflation, deflation or recession etc influence sales forecasting. Changes within the firmThe conditions in the industry also influence sales forecasting. For example, shortage of raw materials, shortage of finance, etc disturb the firm’s activities and thus give rise to uncertainties in sales and production. Internal conditions of business Enterprise The internal conditions like pricing policy, advertising, promotion policy, selection of distribution channel etc also affect sales forecasting.

Taste of consumers Different consumers have different taste. It may be any product like wearing apparel, vehicles, furniture etc. Sales depend on the size of consumers, gender, age, population etc. PeriodSales forecasting is also influenced on the basis of short run, medium run and long run forecast. Market Conditions Market conditions change for a seemingly endless number of reasons.

Sometimes there are conditions that are easy to predict, such as a slump in the sale of bathing suits in the autumn and winter, or a sharp increase in the sale of turkeys just before Thanksgiving. Meanwhile, there are many factors that may not be apparent until long after the sales forecast has been made. Such factors may include a quick jump in fuel prices that cause people to stop driving unnecessarily and buy less gasoline.The release of a new technology that makes a previously popular technology obsolete can also have an immediate impact on sales. New Products New products can be the most challenging to forecast. The products that are very new and are not similar to other items or services on the market can be particularly difficult. These items have no historical data on which to base past performance and trends in demand.

Despite market research and in depth investigation into the potential popularity of an item, sales forecasting of this type is little more than a guess.When a product has been around for a few years, or has an obvious competitor already on the market, it makes predicting sales performance easier by providing a base sales number from which to begin. New products do not have this advantage. Where the product is in its life-cycle. For example, a product in the maturity stage of the life-cycle is likely to have substantial historical sales data to support a short-term forecast.

By contrast, a product that is still in development or which has only just been launched does not have such a quantitative track record. It may also be in a new market which is not yet well researched.


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