Sales Forecasting Flashcards
(23 cards)
what is a sales forecast?
- a projection of the amount of products or services a business expects to sell within a specified future period
what is extrapolation?
- using past experience or past business data to forecast future sales
what are the 2 quantitative sales forecasting methods?
- time series analysis
- use of market research data
what are the 4 qualitative sales forecasting methods?
- delphi technique
- brainstorming
- intuition
- expert opinion
how does time series analysis work?
- uses evidence from past sales records to predict future sales patterns
what are the 4 ways time series analysis can be used?
- seasonal analysis
- trend analysis
- cycle analysis
- random factor analysis
explain seasonal analysis
- sales are measured on a weekly or monthly basis to examine the seasonality of demand
explain trend analysis
- focuses on long-term data which has been collected over a number of years
- the objective is to determine whether the general trend of sales is rising, stagnant, or falling
explain cycle analysis
- focuses on long-term data which has been collected over a number of years
- the objective is to examine the relationship between demand levels and economic activity
explain random factor analysis
- attempts to explain how unusual or extreme sales figures occur
how are future sales displayed on extrapolated sales graphs?
- as a dotted line
how do you calculate a 3 point average?
- take the 3 adjacent figures for each month and divide by 3
whats the effect of a 3 point average?
- to smooth out seasonal variations
- helps us plot or predict trends
what are 4 pros of time series analysis?
- helps the business plan ahead
- helps with financial planning, including cash flow management
- reduces risk of unexpected surprises
- production planning to ensure efficiency
what are 2 issues with time series analysis?
- historical data isnt always a good indication of what might happen in the future
- success isnt guarenteed
what are 3 types of market research data that can be used in sales forecasting?
- surveys of customer intentions
- direct sales information
- test marketing
explain the process of the delphi method
- begins with the initial development of questionnaire focusing on the problem or issue in question
- a panel of expects is selected
- questionnaire is sent to each of the experts
- each ppt answers individually and returns it
- responses are summarised
- further questionnaire is developed based on the last ones findings, and sent to the same panel
- experts all independently rate and prioritise ideas
what is the core principle of the delphi method?
- forecasts from a structured group of experts are more accurate than those from individuals or unstructured groups
what are 3 pros of the delphi method?
- flexible, can be applied to a range of complex problems
- provides a structured way for a group of individuals to make decisions
- gives ppts time to think through their ideas, better quality of response
what are 3 cons of the delphi method?
- time consuming
- monetary payments may lead to bias
- assumes experts are willing to come to a consensus
whats the basis of brainstorming?
- the problem statement
whats an example of someone who can give expert opinion?
- industry consultants
what 3 external factors can affect sales forecasting?
- economic factors
- consumer factors
- competition factors
