Sales Management Sales Forecasting Topic 13. Sales Forecasting What is it? Why do it? Qualitative vs Quantitative Goal = Accuracy Commonly Done by Marketing.

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Presentation transcript:

Sales Management Sales Forecasting Topic 13

Sales Forecasting What is it? Why do it? Qualitative vs Quantitative Goal = Accuracy Commonly Done by Marketing

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

Goal is…. Accuracy And Accuracy

Mean Absolute % Error (MAPE) Why Mape (or MSE)? All past forecasts Does not control for external shocks

Patterns Trend Seasonality Cycle Outliers

Market Potential Buying Power Index NAICS Trade Press Chain Ratio Leading Indicators

Qualitative Methods Turning Points & Shocks Sales Force Composite Jury of Executive Opinion Survey of Customer Buying Intentions

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

Naïve Method Previous Period = Forecast More Accurate than you think

Moving Averages 2PMA 3PMA Ex 2PMA: t1 = 100 t2 = 150 Forecast = 125

Exponential Smoothing 2 Formulas Usually High Alpha (why done)

Exponential Smoothing Example Alpha = = = = forecast =.9 (1200) +.1 (1000) = forecast =.9 (1100) +.1 (1180) = 1108

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

Trend Projections Why Done Problems With

Most Firms Use > 1 Method