3.3.3.1 Quantitative Sales Forecasting

Define sales forecasting

Process of predicting future sales levels by volume or value and future trends

Define quantitative sales forecasting

based on data which is either historic or result of quantitative research

What is sales forecasting used for?

• inform resource management abt inventory levels, production output and logistics

• inform cash flow n budgets

• aid workforce planning

Define time-series analysis

shows past sales figures in date order

marketers use this historical data after fluctuations have been smoothed out to identify trends

trends used to predict future sales

What do moving averages in time series data show?

• shows whether a trend’s significant by smoothing out fluctuations in data

• identifies influencing factors on future sales (seasonal, cyclical or random fluctuations)

• sufficient data is needed to give validity to trend identified

How do you calculate moving averages?

Just calculate the mean!

Define scatter graph

plot relationship between 2 variables to identify the correlation

Define casual modelling

explains data by finding a link between one set of data and another

Define correlation

identify relationship between 2 vals

• Positive (2 variables move in the same direction)

• negative ( 2 variables move in opposite directions)

• zero (no relationship between the factors)

Features of quantitative sales forecasting

• the further into the future the greater the uncertainty

• sales will be influenced by external influences which are difficult to accurately predict

• the past isnt always an indication of the future

• can be biased

• inadequate market research