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by Marketing
Sales Forecasting is a process of estimating future sales. It indicates how much of a product is likely to be sold in the future. It is based on historical data, industry trends, and current sales status. It is a mere prediction about your sales to develop a sales plan. Companies can roughly estimate the sales which will help them to plan their business sales model. It shows the workable volume of sales. It helps with business planning and budgeting.
Short Term Forecasting means estimating sales for a shorter period. The period for short-term forecasting is varying, from a month to a year. Its frequency can be weekly, monthly, quarterly, half-yearly, and yearly. We can create a production policy, plan material requirements, purchase procedure, and inventory control.
The forecasting for around 2 to 4 years is known as medium-term forecasting. It helps us to manage budgets, expenditure, and production.
When we forecast sales for a longer period, it will be considered as long-term forecasting. The period varies from more than 5,10,20 years. It helps to plan financial requirements for your company. You can arrange personnel, raw material, and labour as per the forecasting.
Time series is a process of observing data over time. In this, you gather historical values and associated data for forecasting sales. It includes analyzing cyclical changes, seasonal variations, and irregular fluctuations.
Sales trends analysis means finding patterns in data. It means if the trend is going upward it will be beneficial for you and vice versa. It provides us a measurable track to our progress.,
This method is a combination of last period’s sales and past average. It means you neither use very old data nor previous numbers. It provides sales forecasting about the sales which are neither related to seasonal variation nor market secular trends.
Regression analysis is a mathematical method of sales forecasting. It needs knowledge of statistics and regression values.
This method includes a jury of executives and experts. This jury tells about the future market with the help of their knowledge and experience. They consider various internal and external factors.
In this method, companies directly approach their sales team. As these people work in direct contact with customers. They will know more about them. They can give us information about their needs and hence about sales forecasting.
This is all about sales forecasting. Every company needs to forecast its sales to prepare sound planning for the future. You can’t wait for future problems and then find solutions to tackle them. You need to prepare a pre-defined plan for which you need sales forecasting. You can arrange your raw material, personnel, and production capacity as per the sales forecasting. There are various methods of sales forecasting available. Sometimes only a single method is not suitable. So, you can choose combinations of methods for sales forecasting. You need to review and revise your sales forecasting periodically. You should try to determine a method that is short, inexpensive, and accurate. The criteria of a good forecasting method include: