Sales Forecasting and
Budgeting
Someone
Topics Covered
Planning
Qualitative Techniques
Quantitative Techniques: Time Series and
Casual
Use of Computer Software in Sales-Forecast
Budgeting: Purposes
Alternative Types of Budgeting
Budget Determination
The Sales Budget
Budget Allocation
Conclusion
Forecasting: Base-line of
Planning
Businesses are forced to look well ahead in
order to plan their investments, launch
new products, decide when to close or
withdraw products and so on. The sales
forecasting process is a critical one for
most businesses. Key decisions that are
derived from a sales forecast include:
- Employment levels required
- Promotional mix
- Investment in production capacity
Types of Forecasts
There are two major types of forecasting, which
can be broadly described as macro and
micro:
Macro forecasting is concerned with
forecasting markets in total. This is about
determining the existing level of Market
Demand and considering what will happen to
market demand in the future.
Micro forecasting is concerned with detailed
unit sales forecasts. This is about determining
a product’s market share in a particular
industry and considering what will happen to
that market share in the future.
Short-term Forecasts
Medium Term Forecasts
Long term Forecasts
FORECASTING
Appropriate production scheduling
Reducing cost of purchasing R/M
Determining appropriate price policy
Setting sales targets and establishing
controls and incentives
Evolving a suitable promotional program
Forecasting short-term financial
requirements
FORECASTING
Planning of a new unit or expansion of an
existing unit
Planning of long-term financial requirements
Planning of man-power requirements
Sales Forecasting
A sales forecast is a prediction of sales
under a given set of conditions.
Sales forecasts are usually prepared under
the direction of the top sales executive.
The sales budget is the result of decisions to create
Conditions that will generate a desired level of sales.
Factors to Consider When Forecasting Sales
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Forecasting: Qualitative
Techniques
Consumer/User Survey Method
Panels of Executive Opinion
Sales force Composite
Delphi Method
Bayesian Decision Theory
Product Testing and Test Marketing
Quantitative Techniques: Time
Series
Moving Averages
Exponential Smoothing
Time Series Analysis
Z-Charts
Quantitative Techniques:
Casual
Leading Indicators
Simulation
Diffusion Models
Use of Computer Software in Sales-
Forecast
EXECUSTAT
FOCA
MINITAB
RATS
SAS/ETS
SORITEC
SPSS
STATGRAPHICS
STATPAC GOLD
MS-EXCEL
Alternative Types of Budgeting
Zero based Budgeting
Strategic Budgeting
Rolling Budgets
Activity based Budgeting
Sales Budget Components
Selling Expense Budget
Advertising Budget:
1. Percentage of last year Sales
2. Parity with Competitors
3. Affordable Method
4. Objective and Task Method
5. ROI Method
6. Incremental Method
Administrative Budget
The Sales Budget
Sales Forecast
Sales Budget
Sales Department Budget Production Budget Administrative Budgets
Cash Budget Profit Budget
Revenue Expenditures Expenditure Revenues
Salesforce Evaluation
Flow of Presentation
Introduction
Sales force evaluation process
Role of evaluation in sales management
Setting performance standards
Introduction
Process
Why evaluation?
Setting Standards of
Performance
The control process is based on comparison
of actual results with standards
Standards provide a fair method of
assessing and comparing performance
The standards depends on
Region
People
Product
Thank You
