Forecasting The art of estimating future demand by anticipating what buyers are likely to do under a given set of conditions Very few products lend themselves to easy forecasting Products with a steady growth are easier or if the competitive situation is stable so most products do not meet this

Bad Forecasting Poor forecasting leads to: 1.Overly large inventories 2.Costly markdowns 3.Lost sales 4.Loss of profits 5.Unstable relationship with suppliers 6.Upset managers and shoreholders

Sales Forecasts A three step process: 1.Environmental forecast 2.Industry Forecast 3.Company sales forecast

Environmental Forecast Calls for projecting inflation, unemployment, interest rates, consumer spending and saving, business investment, government expenditures and net exports Really it is the Gross Domestic Product This leads to the industry forecast Assume that you get a share of the market

Sales Forecast Techniques used to forecast 1.What people say – responses from surveys, salesperson input and expert opinions 2.What people do – test marketing to assess buyer response 3.What people have done – past buying behaviour, statistical demand analysis trends over time

How to do a Sales Forecast Look at past sales, past buying habits Plus Look at present demand Plus Estimate future demand Best case: It’s a guess and not an exact science but important because of results of poor forecasting can effect company profits.