Qualitative Sales Forecasting

What are qualitative sales forecasting techniques?

Qualitative forecasting methods are used when historical data is not available to carry out quantitative methods.

Qualitative methods involve the use of opinions to predict future events and are subjective.

What are some qualitative methods of sales forecasting?

• Brainstorming

• Initution

• Expert opinion

• The Delphi method

What is brainstorming?

Brainstorming is a subjective technique for generating new, useful ideas and promoting creative thinking, usually between a group of people.

It can be used to predict outcomes based on the group’s subjective thoughts and feelings.

What is intuition?

It is difficult to predict the future if products are new to the market as there may be very little historical data available or if the market a business operates in is unstable and is constantly changing.

With limited data available to collect and examine, business leaders and managers may instead use their ‘gut feeling’ or intuition. They may have experience of other existing markets and products that can be transferred to new markets and products.

The use of intuition is cheap, and fast. There is no need for data gathering, market testing etc. But gut feeling and experience should not be the only guide. Even if experienced managers ‘feel it in their bones’, there is no excuse not to carry out some further forecasting techniques

What does expert opinion involve?

Involves specialists or experts of a specific field meeting and discussing possible sales forecasts.

What does the Delphi method involve?

Members of a panel of experts respond to questions and each other until reaching an agreement (consensus) on a forecasting task i.e. estimating future sales growth in a market.

What are the advantages of using the Delphi method to businesses?

• It is flexible enough to be used in a variety of situations and be applied to a range of complex problems.

• The Delphi method creates a record of the expert group’s responses and ideas, which can be used when needed.

• Participants have time to think through their ideas, leading to a better quality of response

What are the disadvantages of using the Delphi method to businesses?

• The method will more than likely require a substantial period of time to complete as the process is time consuming to coordinate and manage.

• It assumes that experts are willing to come to a consensus and allow their opinions to be altered by the views of other experts.

• Monetary payments to the experts may lead to bias in the results of the study.