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SALES FORECASTING


SALES FORECASTING
        The key factor in successful marketing planning is the measurement and forecasting of market demand. Sales forecasting is a method of estimating sales volume that a company can expect to attain within a specified time period. Some definitions may be helpful to understand sales forecasting. According to Mathews, Buzzles, Lovitt and Frank, “A sales forecast is an estimate of the sales of a company’s product that are expected to be achieved during a given future period in given place.” In the words of Cundiff and Still, “Sales forecast is an estimate of sales during a specified future period, which estimate is tied to a proposed marketing plan and which assumes a particular set of uncontrollable and competitive forces.” Philip Kotler has described it as “The company forecast is the expected level of company sales based on a chosen marketing plan and the assumed marketing environment.” Thus, from the above definition it is clear that sales forecasting is an estimate of company’s sales in a given future period.

MAIN CHARACTERISTICS OF SALES FORECASTING

(1) It is an estimate of company’s sales.

(2) It is not a prediction of sales. Prediction involves element of uncertainty, but there is element of reasonable certainty is sales forecasting.

(3) Sales forecasting is done for a specified future period. The most widely used period of sales forecasting is one year. This period may be reduced to quarterly basis or a monthly basis.

(4) Sales forecasting is expressed in money or in units of product to be sold.

(5) Sales forecasting has an important role in designing the marketing plan of a company.

(6) Sales forecasting is affected by the general business conditions, the conditions within the industry, the conditions within the company and the changed market situations.

(7) The marketing efforts of a firm depend on its proposed marketing plan available resource and marketing efforts. Thus, sales forecasting is a dependent variable. It is not an independent variable.

(8) Sales forecasting is the starting point of all activities in the firm. It is the sales forecast which initiates all activities in the firm, from procurement of raw material to final production and selling.

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