1.30 Sales Forecasting Flashcards
(22 cards)
What is the purpose of sales forecasts?
Essential for business planning and decision-making.
Helps determine staffing levels, budgeting, marketing strategies, and production needs.
How does sales forecasting aid in resource allocation?
Reduces uncertainty and aids in efficient resource allocation.
Effective resource allocation is crucial for business efficiency.
What is Time Series Analysis in sales forecasting?
Uses past sales data to predict future trends.
It relies on historical data to identify patterns.
What are the four key components of Time Series Analysis?
- The Trend
- Seasonal Fluctuations
- Cyclical Fluctuations
- Random Fluctuations
Each component plays a distinct role in understanding sales patterns.
Define ‘The Trend’ in sales forecasting.
Overall direction of sales over time.
Indicates whether sales are increasing, decreasing, or stable.
What are Seasonal Fluctuations?
Regular variations due to seasons (e.g., higher ice cream sales in summer).
These fluctuations are predictable based on the time of year.
What are Cyclical Fluctuations?
Longer-term ups and downs due to economic cycles (e.g., booms and recessions).
These are influenced by broader economic conditions.
What are Random Fluctuations?
Unpredictable, one-time events affecting sales (e.g., a major sporting event).
These events can significantly impact short-term sales.
List some benefits of sales forecasting.
- Helps plan cash flow
- Aids in inventory management
- Supports marketing strategies
- Assists in supply chain coordination
Effective forecasting can streamline various business operations.
What consumer trend can impact sales forecasting?
Changing habits and preferences impact demand (e.g., shift from physical to online shopping).
Adapting to these trends is crucial for maintaining sales.
How do seasonal variations affect sales?
Different products experience demand fluctuations due to seasons (e.g., higher coat sales in winter).
Businesses need to adjust their strategies accordingly.
What are Long-Term Trends in sales forecasting?
Gradual shifts in consumer behavior or industry trends (e.g., increasing demand for electric cars).
Understanding these trends helps in future planning.
How does Economic Growth influence sales?
Higher GDP growth leads to increased consumer income and spending.
Economic conditions directly affect purchasing power.
What role do interest rates play in sales forecasting?
High interest rates discourage borrowing, reducing demand for expensive goods.
Interest rates can significantly affect consumer spending habits.
How can inflation affect sales?
Rising prices may decrease consumer spending.
Inflation can lead to reduced disposable income.
What impact does unemployment have on sales?
High unemployment reduces disposable income, leading to lower sales.
Unemployment rates are a critical economic variable.
How do exchange rates affect sales?
Stronger domestic currency makes exports more expensive and reduces demand.
Exchange rate fluctuations can impact international sales.
What actions of competitors can affect sales forecasting?
Pricing, promotions, and new product launches by competitors can impact sales.
Competitor activities must be monitored for accurate forecasting.
True or False: Volatile consumer preferences make forecasting difficult.
True.
Rapid changes in consumer trends complicate predictions.
What is a challenge associated with inaccurate data in sales forecasting?
Forecasts based on past trends may not always hold true.
Reliance on outdated data can lead to poor decisions.
What are some difficulties of sales forecasting?
- Volatile Consumer Preferences
- Inaccurate Data
- Economic Uncertainty
- Competitor Influence
- Subjective Judgment
Each of these factors can lead to forecasting errors.
What does subjective judgment refer to in sales forecasting?
Expert opinions may introduce bias into forecasts.
Personal biases can skew the accuracy of predictions.
