SALES FORECASTING

KUNWAR ANKUSH SAXENA

ASSISTANT PROFESSOR – SBM
IFTM UNIVERSITY
 Sales Forecasting
Predicting “Sales Volume”
For Better Planning
Of All Functions
And Efficient & Effective utilization of Resources
• Qualitative / Judgmental / Subjective Techniques (Intuitive)
• Quantitative / Objective Techniques (Factual)

• Both are practiced in conjunction (together)

 Consumer Survey | Market Survey
• Asking consumers
• More suitable for B2B products than B2C
Customer knowledgeable Customer less knowledgeable
(marred with high optimism)
Meeting One to One relatively Meeting all not possible, small
feasible sample not enough
 Panels of Executive Opinion
• Internal & External Experts (users / other knowledgeable people /
executives from other departments)
• Share their individual forecast
• For the industry (Top Down Method)
• Members meet / convene
 Sales Force Composite
• Forecast by individual sales personnel selling a product (category)
• Cumulative Forecast for the product
• Bottom Up | Grass Root Approach
• Remunerations often attached to the forecast made
• Demerit is (likely) SPIKED predictions
 Delphi Method
• Members (experts) chosen but don’t convene
• Leader administers questionnaire to chosen experts
• Responses include comments on behavioral questions
• Responses are shared with members
• Next Round of questionnaire starts
• Comments Forecast
translated
 Bayesian Decision Theory
• Bayesian decision theory refers to the statistical approach based on tradeoff
quantification among various classification decisions based on the concept of
Probability(Bayes Theorem) and the costs associated with the decision.
• It is basically a classification technique that involves the use of the Bayes Theorem
which is used to find the conditional probabilities.
• In Statistical pattern Recognition, we will focus on the statistical properties of
patterns that are generally expressed in probability densities (pdf ’s and pmf ’s), and
this will command most of our attention in this article and try to develop the
fundamentals of the Bayesian decision theory.
• Bayesian Decision Theory is a simple but fundamental approach to a
variety of problems like pattern classification. The entire purpose of the
Bayes Decision Theory is to help us select decisions that will cost us the least
‘risk’. There is always some sort of risk attached to any decision we choose.
 Product Testing & Test Marketing
Product Testing Test Marketing
Pre Production Model is tested A Ready Product
Sample of Potential Users Tested with small group representative of TG
To learn deficiencies Miniature version of National / Global Roll Out
To decide Yes / No to commercial roll out
 Time Series Analysis
• Based on past data at some points in time, Future Sales is predicted
• Time – the only variable here…
• Irrational fluctuations / Unforeseen circumstances can’t be predicted
• Not much practical given dynamic nature of the business environment
 Causal Techniques
• Causal forecasting is a strategy that involves the attempt to predict or
forecast future events in the marketplace, based on the range of
variables that are likely to influence the future movement within that
market.
• Very Practical and Better than many other methods