Sales Forecasting

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  • Mention figures in (crores, lacs, etc??)
  • Mention figures in (crores, lacs, etc??)
  • Mention figures in (crores, lacs, etc??)
  • Sales Forecasting

    1. 1. Sales ForecastingSales Forecasting
    2. 2. What is Sales Forecasting?What is Sales Forecasting? “Prediction based on past sales performance and an analysis of expected market conditions.” • The true value in making a forecast is that it forces us to look at the future objectively.
    3. 3. Importance of Sales ForecastingImportance of Sales Forecasting Evaluation of past and current sales levels and annual growth Compare your company to industry benchmarks Establish policies to monitor prices and operating costs Make a company aware of minor problems before they become major problems
    4. 4. Importance of Sales ForecastingImportance of Sales Forecasting Companies that implement accurate sales forecasting processes realize important benefits such as: • Optimised cash flow • Knowing when and how much to buy • In-depth knowledge of customers and the products they order • The ability to plan for production and capacity • The ability to identify the pattern or trend of sales • Determine the value of a business above the value of its current assets • Ability to determine the expected return on investment
    5. 5. Internal factors affecting SalesInternal factors affecting Sales ForecastForecast New Product lines Production Capacity changes Change in Distribution method Price Changes Working Capital shortages Inventory Changes Sales Motivation Plans Credit Policy Changes Labor Problems Internal Factors
    6. 6. External factors affecting SalesExternal factors affecting Sales ForecastForecast Productivity changes Weather Population changes Consumer earnings Styles or fashions Political events Direct and indirect competition State of the economy Seasonality of the business External Factors
    7. 7. NeedNeed Every company needs to generate forecasts of their short to medium term sales. Being able to forecast demand more accurately has major commercial advantages, whether the forecast is used:  To plan purchasing, production and inventory  As the basis of marketing or sales planning  Or for financial planning and reporting or budgeting
    8. 8. Types of forecastingTypes of forecasting Time-Series Forecasting A common forecasting task is to predict sales for the next 12 months based on sales of the past 36 months. Time-series techniques are quantitative-that is, they use values recorded at regular time intervals (sales history) to predicts future values
    9. 9. Correlation or Regression TechniquesCorrelation or Regression Techniques Another common forecasting task is to predict the increase in sales given some marketing action such as a sales promotion or advertising campaign. In this case, correlation or regression techniques are used to compare how a change in one variable (e.g. advertising effort) causes a change in another variable (e.g. sales volume).
    10. 10. Qualitative TechniquesQualitative Techniques Changes in sales volume may result from the actions of the company or from other factors such as actions by competitors and economic conditions. Time-series techniques cannot foresee and regression techniques cannot account for changes in demand patterns and other relationships that affect sales volume. Instead qualitative techniques (also called subjective and judgmental techniques) call on the expertise of people inside and outside the company to adjust the forecast to account for these factors. The three categories include many different sales forecasting
    11. 11. Indian paint industryIndian paint industry  The paint market in the country is estimated at around Rs 8,200 crore  Around 35% of this market is with the unorganized players  Asian Paints is the largest player in controlling around 30% of the overall paint market.  Asian Paints is India's largest paint company and the operates in 21 countries and has 29 paint manufacturing facilities in the world servicing consumers in over 65 countries.  Besides Asian Paints, the group operates around the world through its subsidiaries Berger International Limited, Apco Coatings, SCIB Paints and Taubmans  The demand for paints is relatively price-elastic but is linked to the industrial and economical growth.
    12. 12. In most developed countries, the ratio of decorative paints vis-ã -vis industrial paints is around 50:50. All the industry majors have a vast dealership network and are required to maintain high inventory levels Most of the paint leaders have technical tie-ups with global paint leaders.
    13. 13. In India the organised sector controls 70 percent of the total market with the remaining 30 percent being in the hands of nearly 2000 small-scale units In India the industrial paint segment accounts for 30 percent of the paint market while the decorative paint segment accounts for 70 per cent of paints sold in India
    14. 14. Asian PaintsAsian Paints
    15. 15. A few definitions…A few definitions… Enamel – Paints for metals & also wood Distempers – Economy interior wall paint Interior Emulsion – Acrylic interior wall paint Exterior Emulsion – Acrylic exterior wall paint Wood Fin – Premium wood coating with natural look Undercoats – primers for adhesion, Putty for leveling surfaces Ancillaries – other paint requirements eg stainer, thinner, etc.
    16. 16. Asian Paints Category PortfolioAsian Paints Category Portfolio
    17. 17. Category ProfileCategory Profile APL is identified with the common man right from the time the little boy Gattu was made famous by RK Laxman. Even now Enamels & distempers contribute upto 50% Emulsions a recent addition adding another 20%
    18. 18. YOY overall growthYOY overall growth Value in Rs. Crs.
    19. 19. Competition Scenario 0 500 1000 1500 2000 2500 3000 3500 4000 4500 Asian Paints* Kansai Nerolac ICI India Berger Paints FY07 FY08E
    20. 20. ObservationsObservations APL growth – YOY in double digits for the past 5 yrs. Growth % higher than competitors in the last 3 years Changing consumer tastes led to new products & focus on premium products.
    21. 21. Seasonality – ’07-08Seasonality – ’07-08 In litres
    22. 22. Seasonality ‘08-09Seasonality ‘08-09 In litres
    23. 23. SeasonalitySeasonality Painting has been a seasonal activity across country Main seasons -, pre Diwali, Durga Pooja, Pongal, Ramzan, Ganesh Chaturthi,etc. 70 – 75 % business done during this period. Trends changing , especially urban & metros Bombay figures show not a vast difference in sales during this period.
    24. 24. Year on Year sales (category)Year on Year sales (category) 0 500 1000 1500 2000 2500 2003 - 04 2004 - 05 2005 - 06 2006 - 07 2007 - 08 2008 - 09 Ancillaries Enamel Ext Emulsions Ext Undercoat Int Undercoats Int Wall Fin Wud Fin
    25. 25. Overall category performanceOverall category performance 0 200 400 600 800 1000 1200 1400 2003/04 2004/05 2005/06 2006/07 2007/08 2008/09 Prem Emulsion Distempers Luxury Emulsion Economy Dist Eco Emulsion Solvent
    26. 26. ObservationsObservations Distempers (Tractor brand ), Enamels (Apcolite & Gattu), Premium Emulsion, Cash cows for the Co. Royale & Faux finishes (Play), Melamyne are Stars Emulsions & Wood finish growing continuously at 15% higher than company growth. Hence focus clearly on Emulsions.
    27. 27. Forecasting - ProcessForecasting - Process Annual Retail audit conducted at dealer & Territory level All products accounted for. Audit gives the dealers actual potential & approximated turnover Competitor turnover is also recorded.
    28. 28. A town level profiling is done to identify town potential Parameters for profiling – development activities, construction, consumer profile, market share, etc. Profiling helps identify actual potential of town & dealers located in it. Post profiling estimate turnover for the next year approximated.
    29. 29. Forecasting at decision levelForecasting at decision level Regional level forecasting involving the Depot managers, RM & DM. GM Involved in discussions. Co level focus products identified Discussions based on regional level CAGR for past 5 yrs This data gives the trend of sales at a product category level.
    30. 30. Overall Category growth Grouping 2003/04 2004/05 2005/06 2006/07 2007/08 2008/09 Gr% Ancillaries 97 101 116 127 144 110 -23% Enamel 919 1014 1078 1090 1125 1000 -11% Ext Emulsions 289 288 337 429 437 462 6% Ext Undercoat 16 37 43 65 88 94 7% Int Undercoats 564 646 717 743 755 686 -9% Int Wall Fin 1425 1695 1914 2054 2212 2513 14% Wud Fin 159 174 174 192 184 217 18% Wud Fin Undercoat 0 0 0 0 0 0 86% Grand Total 3468 3955 4379 4700 4945 5083 3%
    31. 31. Interior wall finishes Main Group 2003/04 2004/05 2005/06 2006/07 2007/08 2008/09 Gr% 1st Qlty Dist 285 348 404 442 480 535 11% 2nd Qlty Dist 499 546 593 592 638 690 8% 3rd Qlty Dist 34 53 76 104 95 119 25% Economy 52 73 102 117 154 230 49% Economy Dist 34 31 30 28 28 20 -30% Faux Fin 0 0 2 3 10 46 370% Luxury 59 73 82 104 119 160 35% Premium 203 244 273 285 322 356 11% Solvent 257 326 343 342 344 360 5% Grand Total 1424 1694 1903 2016 2191 2516 15%
    32. 32. Product growths analyzed Competitor performance analyzed in these focus products. Market trends, changing consumer trends analyzed
    33. 33. PlansPlans Plans for the year chalked out on the analysis of these diverse data. Budgets for the Region – Depot based on these forecasts. Production forwarded these forecasts for demand planning
    34. 34. Forecasting - ManufacturingForecasting - Manufacturing Forecasting activity carried out also by production “ i3” software – highly sophisticated, simplifying the activity 5 yrs data considered & a forecast created by the software Also movement of SKU’s at depots, regions considered in this activity
    35. 35. Deliberations between production & sales Trends may give a different forecast against plans forwarded by sales A midpoint reached & production planning for the year is loaded onto the system. Sales has an option of minor modifications in production for each month. This activity reduces the chances of dead stock.
    36. 36. Planning the forecast deliveryPlanning the forecast delivery Once the forecasts are finalised, Activities are planned to deliver the figures. Eg: for 2009/10- 1st half of the year will be slow. This period will focus at influencer & consumer activities. Shop meets for low end painters Contractor meets & training programmes for influencers In-shop selling activities (all show casing & educating on new & focus products use & properties)
    37. 37. Budgets at Depot & Territory levelBudgets at Depot & Territory level Post forecasting & Budgets @ regional & depot level – Territory level budgets finalised. For finalisation of budgets the potential of dealers & towns profiled is considered.
    38. 38. THANK YOU

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