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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 on theme: "Sales Management Sales Forecasting Topic 13. Sales Forecasting What is it? Why do it? Qualitative vs Quantitative Goal = Accuracy Commonly Done by Marketing."— Presentation transcript:

1 Sales Management Sales Forecasting Topic 13

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

3 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

4 Goal is…. Accuracy And Accuracy

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

6 Patterns Trend Seasonality Cycle Outliers

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

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

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

10 Naïve Method Previous Period = Forecast More Accurate than you think

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

12 Exponential Smoothing 2 Formulas Usually High Alpha (why done)

13 Exponential Smoothing Example Alpha = 0.9 2020 = 1000 2021 = 1200 2022 = 1100 2022 forecast =.9 (1200) +.1 (1000) = 1180 2023 forecast =.9 (1100) +.1 (1180) = 1108

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

15 Trend Projections Why Done Problems With

16 Most Firms Use > 1 Method


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