Quantitative sales forecasting

calculating time series data

identifies trend, seasonal, cyclical and random fluctuations

sales forecasting

Sales forecasting allows businesses to predict future sales based on historical data.

qualitative sales forecasting

statistical technique which uses data to make predictions about the future 

It uses historical data smoothed out to make better predictions for the future by analyzing patterns and trends.

identifying a trend

an analysis of figures will tell a business whether a trend is going upward, downward or is constant and to predict what is likely to happen in the future

moving average

an average is taken for any period a business wants such as year, month or quarter

moving averages which smooth out the fluctuations in the data. This makes it easier to identify underlying trends.

Three period moving average

A three period moving average calculates the:

• Average of periods 1, 2 and 3

• Average of periods 2, 3, and 4

• Average of periods 3, 4 and 5

Four quarter moving averages

you’re using four time periods there is no clear middle point (unlike the three) and so this can be solved by using a technique called centring.

Centering

This is where you find the average of two four quarter moving averages - you then place this against the third quarter of the first moving average. 

limitations to quantitative sales forecasting

• Business need to appreciate SWOT and PESTLE factors that may affect future predictions

• Relies on what has happened in the past continuing into the future

• and may not account for sudden market changes or external factors. (dynamic markets)