sales

Topics: Forecasting, Forecast error, Sales Pages: 10 (1935 words) Published: September 23, 2013
INTERNATIONAL SCIENTIFIC DAYS 2006
"Competitivness in the EU – Challenge for the V4 countries"

Faculty of Economic and Management SAU in Nitra
Nitra, May 17-18, 2006

THE SALES FORECASTING TECHNIQUES
MARTINOVIC Jelena, (SCG) - DAMNJANOVIC Vesna, (SCG)
ABSTRACT
Many sales managers do not recognize that sales forecasting is their responsibility. In this paper we summarized techniques that manager used into two types: qualitative and quantitative techniques. We also discuss the use of computer software in sales forecasting in Serbia. KEY WORDS

sales forecasting, quantitative and qualitative techniques
INTRODUCTION
Forecasting activity should help managers to make better decisions in the process of planning the business strategy.
The purpose of planning process is to allocate company resources in a manner to achieve anticipated sales.
A company can forecast sales either by forecasting market sales (called market forecasting) and determining what share of this will accrue to the company or by forecasting the company’s sales directly. In this paper we explain techniques for sales forecasting. There are different periods when we need to predict some results. 1. Short term forecasts – there are usually for periods up to three months ahead and are really of use for tactical matters such as production planning. The general trends of sales is less important here then short term fluctuations

2. Medium term forecasts – these have direct implication for planners. They are of most importance in the area of business budgeting, the starting point for which is sales forecast. Thus if the sales is incorrect then the entire budget is incorrect. 3. Long term forecasts – these are usually for periods of three years and upwards depending upon the type of industry being considered. For computer industry is a long period but for some other industry such as steel manufacture ten years is a typical long term horizon. Such forecasts are needed mainly by finance accountants for long time resource implications and generally the concern of boards of directors.

Other functions in company (production, purchasing, finance, human resource sector) can be directly and indirectly affected in their planning considerations as a result of the sales forecast. [3]

526

INTERNATIONAL SCIENTIFIC DAYS 2006
"Competitivness in the EU – Challenge for the V4 countries"

Faculty of Economic and Management SAU in Nitra
Nitra, May 17-18, 2006

THE FORECASTING PROCESS
The forecasting process refers to a series of procedures used to forecast. It begins when an objective is determined. For example sales objectives can be (estimation of dollar sales, number of sales people to hire, etc.).

Next step is determination of dependent refer to what is being forecasting: sales or the number of sales people to hire next year) and independent variables. After this step we should determine forecast procedure and methods for analyzing data.

Data are then gathered and analyzed often assumptions must be made about the forecast. The forecast is made, finalized, and, estimate passes, evaluated. [2]

Figure1. The forecasting process

It is important to know when we should use qualitative or quantitative forecasting techniques. Managers apply quantitative forecasting techniques when environment is predictable and if they have data from past period about sales. These techniques are good when we want to predict existing products and technologies. They often used mathematics’ techniques for forecasting. Qualitative forecasting techniques are used in the not predictable environment and when we don’t have enough data. These techniques are usually used when managers forecast launching the new product line or new technologies. [5]

527

INTERNATIONAL SCIENTIFIC DAYS 2006
"Competitivness in the EU – Challenge for the V4 countries"

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Executive
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Faculty of Economic and Management SAU in Nitra
Nitra, May 17-18, 2006

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