Sports & Entertainment Marketing II 4.05d Forecasting sales for a marketing plan.

BR Define the following terms: Sales forecast Top-down approach Bottom-up approach Jury of executive opinion Delphi technique Sales force composite Survey of buyer intentions

Sales Forecast Prediction of what a firm’s sales will be during a specific future time period Can be short term, intermediate, or long term in nature Forecasts help determine… – How much to buy – What new items to offer – How many workers are needed – What prices to charge – Whether promotion is needed

Top-Down Approach Also known as the breakdown approach Prepared for the company as a whole Forecast is broken down into forecasts for specific products, salespeople, territories, product lines, departments, etc.

Bottom Down Approach Also known as the build-up approach Prepared by starting with separate forecasts for specific products, salespeople, territories, etc. Then, individual forecasts are combined into a forecast for the entire company

Forecasting Quantitative Forecasting – Based on the results of gathering and analyzing all kinds of numerical market data – Economic trends, population changes, consumer spending, industry forecasts, etc. Qualitative Forecasting – Based on expert opinion or personal experience – Predictions based on what they have seen in the past as well as current economic observations

Jury of Executive Opinion Advantages – Based on reliable, inside opinion – Quick and easy to use Disadvantages – Results depend on executive’s skill – Predictions carry equal weight  problem if predictions are not as relevant/accurate as others

Delphi Method Predictions are made secretly and then averaged together Results of the first poll are sent to the experts who respond with a second opinion Process is repeated until a very narrow, firm median is agreed upon

Delphi Method Advantages Can prevent social pressure Can prevent forceful individuals from dominating others Can prevent time-consuming discussions or arguments Can gather opinions from those who won’t speak out in groups

Delphi Method Disadvantages Takes a lot of time to complete multiple rounds of the process Can be expensive

Sales Force Advantages Accurate forecasts for individual products Higher sales totals Inexpensive to use Provides detailed information

Sales Force Disadvantages Lacks a long-range view Sales force resentment due to having to take time away from selling to prepare sales forecasts Forecasts that benefit sales force

Survey of Buyer Intentions Advantages Reasonably accurate forecasts Easy to control costs Outside information available

Steps to Prepare Sales Forecasts 1.Gather the data that you will use. 2.Determine the amount by which your sales increased or decreased last year. 3.Determine the percent increase/decrease. 4.Add outside predictions of increases in sales for your area. 5.Subtract outside predictions in sales from negative economic forecasts, reductions in population, increased competition, etc. 6.Convert your final forecast percentage into a dollar figure.

Example #1 Sales from last year: $105,000 Sales from two years ago: $100,000 Other data: – Economy is expected to grow by 2% in the coming year. – Number of consumers in your area is expected to increase by 5%. – A new competitor is expected to reduce your sales by 5%.