Download 4.05d SEM II

Sports & Entertainment
Marketing II
4.05d Forecasting sales for a
marketing plan.
BR Define the following terms:
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Sales forecast
Top-down approach
Bottom-up approach
Jury of executive opinion
Delphi technique
Sales force composite
Survey of buyer intentions
Sales Forecast
• Prediction of what a firm’s sales will be during a
specific future time period
• Can be short term, intermediate, or long term in
nature
• Forecasts help determine…
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How much to buy
What new items to offer
How many workers are needed
What prices to charge
Whether promotion is needed
Top-Down Approach
• Also known as the breakdown approach
• Prepared for the company as a whole
• Forecast is broken down into forecasts for
specific products, salespeople, territories,
product lines, departments, etc.
Bottom Down Approach
• Also known as the build-up approach
• Prepared by starting with separate forecasts
for specific products, salespeople, territories,
etc.
• Then, individual forecasts are combined into a
forecast for the entire company
Forecasting
• Quantitative Forecasting
– Based on the results of gathering and analyzing all
kinds of numerical market data
– Economic trends, population changes, consumer
spending, industry forecasts, etc.
• Qualitative Forecasting
– Based on expert opinion or personal experience
– Predictions based on what they have seen in the
past as well as current economic observations
Jury of Executive Opinion
• Advantages
– Based on reliable, inside opinion
– Quick and easy to use
• Disadvantages
– Results depend on executive’s skill
– Predictions carry equal weight  problem if
predictions are not as relevant/accurate as others
Delphi Method
• Predictions are made secretly and then
averaged together
• Results of the first poll are sent to the experts
who respond with a second opinion
• Process is repeated until a very narrow, firm
median is agreed upon
Delphi Method Advantages
• Can prevent social pressure
• Can prevent forceful individuals from
dominating others
• Can prevent time-consuming discussions or
arguments
• Can gather opinions from those who won’t
speak out in groups
Delphi Method Disadvantages
• Takes a lot of time to complete multiple
rounds of the process
• Can be expensive
Sales Force Advantages
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Accurate forecasts for individual products
Higher sales totals
Inexpensive to use
Provides detailed information
Sales Force Disadvantages
• Lacks a long-range view
• Sales force resentment due to having to take
time away from selling to prepare sales
forecasts
• Forecasts that benefit sales force
Survey of Buyer Intentions
Advantages
• Reasonably accurate forecasts
• Easy to control costs
• Outside information available
Steps to Prepare Sales Forecasts
1. Gather the data that you will use.
2. Determine the amount by which your sales increased
or decreased last year.
3. Determine the percent increase/decrease.
4. Add outside predictions of increases in sales for your
area.
5. Subtract outside predictions in sales from negative
economic forecasts, reductions in population,
increased competition, etc.
6. Convert your final forecast percentage into a dollar
figure.
Example #1
• Sales from last year: $105,000
• Sales from two years ago: $100,000
• Other data:
– Economy is expected to grow by 2% in the coming
year.
– Number of consumers in your area is expected to
increase by 5%.
– A new competitor is expected to reduce your sales
by 5%.