Sales Forecasting
Sales forecasting is the process of estimating future sales.
Cadburys has a ‘brand manager’ for each product within its portfolio.Sales forecasting is the process of estimating future sales.
How many different Cadbury products can you think of?
Each brand manager will focus on the likely future sales of the product they are responsible for.
Imagine this was your role for Creme Eggs (with a £60,000 salary, at least.)
A sales forecast will have an impact on:
1. Investment decisions.
Investment involves the purchase of an asset, with the goal of earning increased income.
Increased forecast sales will lead to increased investment in machinery.
2. The number and type of staff that are required.
More staff will be employed if the scale of operations increase.
3. Promotional activities.
If sales are forecast to fall a business may decide to increase promotion.
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1. Consumer trends.
Habits or behaviours currently prevalent among consumers of goods or services.
For example, increased sales of vegan products.
Confectionery makers reacting to consumer trends:
Gross domestic product (GDP) growth indicates whether the UK economy is growing or contracting.
Figures above 0.0% indicate growth.
Most 'normal' products are likely to sell more if the economy is growing.
Some products will sell more when the economy is in decline.
Can you think of any examples?
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Difficulties of sales forecasting:
This can never be guaranteed.
It can be very difficult to forecast sales if you selling a product in a dynamic market
For a new product there is no previous sales data available to help you predict into the future.
How could McDonald's forecast sales of this product?
