Market Analysis & Sales Forecasting Techniques

Dr. Parveen Nagpal
UNIT 2
Market Analysis
&
Selling

Dr. Parveen NagpalMarket Analysis
➢ A market can be local, regional, national and
international. Products that are unbranded may
have local or regional markets and those that are
branded may be in national and global markets.
➢ Market is one of the important key factors in
analysis that helps to know the size, growth,
competition and their impact on marketing or
sales strategy.

➢ Market analysis is the key to sales analysis and sales
forecasting.
➢ Market analysis is done in terms of various dimensions of
a market or factors which characterize the market.
Market Potential
Dimensions
of a Market
Market GrowthMarket Size
Market Competition
Market Profitability
New Trends / Developments

1. Market Size - The starting point of market analysis is to
understand the current market size, which is measured in
terms of the total sales
2. Market Potential - The current market shows actual
market size whereas the potential market indicates the
possible market size or the existence of unexplored
segments of the market. Example: Cadbury initially focused
only on children that affected the growth of sales, later it
targeted elders.

3. Market Growth - The current size of market is important
but its growth is equally important.
4. Market Competition - is a critical factor in the market
structure of a product.
5. Market Profitability - Competition affects profitability.
Profitability depends on three factors such as :
a)Competition level in the market.
b)Product cost or cost structure.
c)Selling price of the product.

6. New Trends and Developments - has implications for a
company's future sales planning, strategy and investment in
the market.
One of the new trends in the FMCG market is availability of
smaller packs to attract more customers, to induce trial as
well as frequent purchases and consequently increase sales.
Another trend can be seen in the soft drink market with the
introduction of fruit pulp in the drinks, flavoured ice tea etc.

Dr. Parveen NagpalSales Forecasting
➢ Sales forecasting is the process of a company predicting
what its future sales will be.
➢ The forecast is done for a particular period of time in the
near future, usually the next year.
➢ According to the Robert Albanese, “The sales forecast is
one of the major planning premises in business
organizations. It is the result of numerous assumptions
made about the external (industry sales, competitors
actions, for example) and internal (costs, technology,
personnel, for example) environments of the firm.”

➢ According to American Marketing Association, “Sales
forecasting is an estimate of dollars or unit sales for a
specified period under a proposed marketing plan or
programme and under an assumed set of economic and
other forces outside the unit for which the forecast is
made. The forecast may be for a specified item of
merchandise or for an entire line.”
➢ According to Philip Kotler, “Sales forecast is the expected
level of company sales based on chosen marketing plan
and assumed marketing environment.”

Sales forecast can be for immediate future or for short term,
medium term or long term.
1. Short Term Forecasts (3 – 6 months): The purpose is
production and inventory planning and analyzing market
fluctuations, considering external and internal factors.
2. Medium Term Forecasts (6 months – 2 years): The number
of factors considered is more, majorly emphasizing on external
environment.
3.Long Term Forecasts (3 – 5 years): is the most difficult
because it often addresses sales that may happen years in the
future.

Dr. Parveen NagpalImportance of Sales Forecasting
Reduce Uncertainty
Improves Stock Management
Improve Cash flows
Minimize Waste, Maximize Efficiency
Better Planning
Determine Production Volumes
Easier to Procure Finance

Dr. Parveen NagpalMethods of Sales Forecasting
Expert
Opinion
Delphi
Technique
Consumer
Survey
Method
Sales Force
Estimate
Sales
Hierarchy
Estimate
Qualitative
Techniques
Moving
Averages
Sales Ratio
Method
Market
Share
Projection
Regression
Analysis
Quantitative
Methods

Dr. Parveen NagpalQualitative Techniques of Sales Forecasting
1. Expert Opinion or Consensus Method:
In this method, the forecasting team comprising of company
managers, external consultants or experts meet and discuss
the sales forecast.
2. Delphi Technique:
In this technique, forecasting panel consisting of specialists
in the field do not meet together but their opinions are
sought through a questionnaire.

3. Consumer Survey Method:
This method is also known as Market Survey or Research
Method.
A sample survey is conducted among the customers of the
product about their brand preference and likely purchase of
the product during the period for which the forecasts are
made.
In order to conduct a proper survey appropriate
questionnaire is designed to collect right information. The
analysis of the result of the survey leads to sales forecast.

4. Sales Force Estimate Method:
This approach is also called as Grass Root Approach. It
involves forecast by salespeople of the company.
Each salesperson makes a prediction of future sales for his or
her sales territory and discusses the estimates with the area
manager before submitting .
These individual sales forecasts are added up and the sales
manager prepares the final forecast for the company.

5. Sales Hierarchy Estimate
This approach is also called as Step Wise Estimate.
Here the forecast is made by the sales management team with
estimates at various levels of hierarchy beginning from the
territorial sales people to corporate sales manager.
Salesperson – for his territory, Area manager – his area, Regional
Manager - his own estimate, based on their understanding and
analysis of the market, demand pattern and likely sales.
All these estimates are then sent to corporate sales manager
who prepares the final forecast based on average of these
estimates.

Dr. Parveen NagpalQuantitative Techniques of Sales Forecasting
1. Moving Averages
It is a method which uses a number of historical data
values to generate a forecast.
Moving averages are useful if we assume that market demands
are fairly steady over time.
Mathematically:
Moving Average = 𝐷𝑒𝑚𝑎𝑛𝑑 𝑖𝑛 𝑝𝑟𝑒𝑣𝑖𝑜𝑢𝑠 𝑛 𝑝𝑒𝑟𝑖𝑜𝑑𝑠
𝑛
here n = no. of periods in moving average
For applying the method of moving averages the period of
moving averages has to be selected(3- yearly moving averages, 5yr
moving averages

2. Sales Ratio Method
In this approach the past trends in the sales ratio of the
company are projected to the future. The method is also called
as growth rate method. For this method time series analysis of
5 years will be a suitable data. It is more suitable for short term
or medium term projection. It can be used for long term for a
time series of 15 years.

3. Market Share Projection
Market Share projection relates company sales to total
market sales and therefore also reflects the competitive level
of the company. Market share can be projected based on time
series data and the companys sales forecasts may be made on
the basis of market share projections. In this method, the total
market or industry sale has to be separately projected or taken
from some other source to generate company sales forecast

4. Regression Analysis
Regression analysis is purely a statistical technique
commonly used for forecasting purpose. This assumes a set of
relationship between a set of variables which are interrelated
or closely associated. One of the variable is dependent variable
and one or more independent variables which influences or
explains changes or movements in the dependent variable

Dr. Parveen NagpalSales Quota
➢ Sales quotas are the sales goals set by the company for its
marketing units (region, territory, salesperson, distributor,
dealer, etc.) for a certain duration of time.
➢ Sales quotas can be set on sales volume, expense, profit
margin, activity, customer satisfaction etc.
➢ Annual sales quotas are divided into quarterly and
annually.

Dr. Parveen NagpalSales Quota
➢ After the sales forecast is made the company decides its
sales budget that includes the company’s sales, volume
and selling expenses.
➢ The sales budget of the company is divided into sales
quotas for regions and sales territories. Each territory
manager divides the territory’s quota among the
salesperson, distributors, dealers who are attached to the
territory

Dr. Parveen NagpalTypes of Sales Quota
1. Sales Value or Financial Quota
This is one of the most common types of sales quota.
In this type of quota, salespeople are given quotas in terms
of rupees or total value to be achieved by them. Value quota
is more relevant or necessary when a salesperson is required
to sell a large number of products

2. Sales Volume Quotas
Most of the companies have sales volume quotas for
individuals salesperson, distributors, retailers, geographical
areas, or products for a specific period of time.
In order to have proper control sales volume quotas are set
for smallest marketing unit.
Same approach is used to set the sales volume quotas for
products for a specific time period.
Annual sales quota volumes are divided into quarterly and
monthly quotas.

3. Activity Quotas
Activity quotas are set to direct the sales people to
carry out important job related activities which are useful for
achieving the performance targets of the salespeople.
Activity quotas are carried out when the salespeople not
only have to carry out selling activities but also non-selling
activities. The non-selling activities such as getting market
information and payment collection.

4. Combination Quotas
When the company wants to control sales
performance on both key selling and non-key selling
activities. They generally use “point” as a measure to
overcome the problem of different measures used by
various quotas.

Dr. Parveen NagpalFactors Determining Fixation of Sales Quota
Past Sales Record
Buying Power of Customers
Company Policies
Total Production
Extent of Competition
Opinion of Experts
Estimate of Salespersons

Dr. Parveen NagpalSales Territory
➢ A sales territory consists of existing and potential customers
assigned to a salesperson.
➢ The territory may or may not have geographic boundaries.
➢ A salesperson may be assigned to a geographic area consisting
of present and potential customers. For instance, a salesperson
is asked to look after customers located in Mumbai territory.
➢ The territory or a market may be made up of present and
potential customers, rather than a geographical area. For
example, in selling life insurance policies, salespeople sell
mainly to relatives, friends, or known people, without thinking
of their geographic locations.

Dr. Parveen NagpalReasons - Setting up or Reviewing Sales Territories
Increase market or customer coverage
Control selling expenses
Better Evaluation of Salesforce Performance
Improves Customer Relations
Increase Salesforce Effectiveness
Improve Coordination
Benefit Salespeople and the Company

Dr. Parveen NagpalAssigning Salesman to Territories
In assigning salespeople to territories, the sales manager should
consider two criteria:
(a) Relative Ability of Salespeople
(b) Salesperson's Effectiveness in a Territory.

Dr. Parveen NagpalUse of IT in Territory Management
➢ For designing and aligning sales territories, computers and
mapping software are increasingly used by sales managers.
➢ The advantages of using information technology (IT) in territory
management over manual working will be done faster as well
as more comprehensively.
➢ Geographic Information Systems (GIS) is a technology that
provides a framework to manage, analyze, and disseminate
geographical knowledge. GIS technology can be integrated in a
company's enterprise information system framework. There
are a number of software available, which are capable of
running simulations and optimizing territorial design.

Dr. Parveen NagpalUse of IT in Territory Management
➢ Using the software for simulation helps in improving the
territorial design because the computer can examine more
combinations than the manual work done by a sales manager.
➢ The problems in using some of the high-end software are the
high cost and no considerations given to the geographic
obstacles.
➢ However, as more and more companies develop software for
use in designing and revising sales territories, the cost will
come down, and sales managers would find it easier and much
more accurate.

Dr. Parveen NagpalReasons/Advantages of Setting Sales Territories
➢ Increased Market or Customer Coverage
➢ Control Selling Expenses
➢ Better Evaluation of Sales Force Performance
➢ Improves Customer Relations
➢ Increase Salesforce Effectiveness

Dr. Parveen NagpalReasons for Not Setting Sales Territories
There are certain situations when sales territories are not
required:
➢ A small company with one or few salespersons selling in a local
market may not need to set up sales territories.
➢ Personal contacts or relationships is the basis of making the
sales, such as life insurance policies and network marketing.
➢ The salespeople are demotivated due to restrictions of sales
territories, and or may not know how to set up sales territories.
➢ Management of the company may not be aware of the
advantages or benefits of developing sales territories.

Dr. Parveen NagpalSelling
➢ Success in selling and sales management does not depend only
on the product and the sales organization, selling skills,
strategies and tactics are equally important.
➢ There are various activities performed by the salespeople that
are grouped into selling and non-selling activities.
➢ The selling activities consist of various steps of selling process.
➢ The non-selling activities include preparation of sales person,
collecting information, collecting payments, travelling etc.

Dr. Parveen NagpalProcess of Selling
(https://study.com/academy/lesson/practical-application-steps-of-the-selling-process-
infographic.html)

Dr. Parveen NagpalMethods of Closing Sale
Closing
the Sale
Summarise
and Ask
Narrowing
the choice
Action
agreement
Objection
close
Ask for
the order
Alternative
close
Side close
Suggestion
close
Concession
close Trial close

1. Simply ask for the Order: This is the simplest and the most
straightforward method
2. Summarize the presentation and ask for the Order: Some
situations may demand (depending on the buyers behaviour
and the salespersons assessment of the situation) that the
salesperson does not ask for the order immediately after the
presentation
3. Narrowing Down the Choice: When the prospect is unable to
take any decision because of the variety of choices offered to
him, a skillful salesperson may have elimination technique to
gradually reduce the options to lead to the close. This method
is also known as 'Option Elimination Technique’

4. Action Agreement: Appropriate for many industrial and
pharmaceutical products. The purchase of industrial products
involves a large amount of money or funds, thus decision may
not be taken in the first presentation itself.
When both sides agree to do certain things or take some
steps before their next meeting.
The final close in such cases depends on timely follow-up,
abilities to pursue and persistence.
The salesperson/ sales team should try to score on as
many evaluative criteria as possible and close the sale at the most
appropriate time.

5. The Objection Close: The salesperson uses an objection by a
prospect, or, rather, an answer to an objection to conclude a
sale. The answer to the objection is utilized as a stimulus for
decision making. If the sale presentation is progressing
smoothly but an objection raised by the buyer appears to be a
major hindrance, the salesperson may handle it tactfully.
6. Trial Close: It is not the final close; it actually means 'trying to
close' a sale even before the sales presentation is complete.
This is a kind of pre-emptive closure, i.e., an effort to close the
sale when the presentation has made good progress so that
the prospect may not raise any further objection.

7. Concession Close: This is one of the more straightforward and
commonly used methods of closing a sale giving a final
concession (like a discount) to seal a deal. A concession is
actually an inducement to the buyer to buy. Therefore, this
method of closing is also known as the 'inducement close’.
8. Suggestive Close: Sometimes, a salesperson may not give a
direct concession, but indirectly offer inducements in the form
of suggestions which may appeal to the buyer and induce him
to place an order

9. Side Close: Often, it happens that even after the sales
presentation, the seller and the buyer fail to agree on many
points. This may include the basic product itself and side
issues or points like features, colour, size, delivery, payment
schedule etc.
10. Alternative Close: The alternative close is similar to, and can
also be called an extension of, the side close. This method is
used when the prospect is willing to buy the product but is
indecisive about a few related points or issues - quality,
features, delivery etc. To lead to decisions on these points, the
salesperson suggests two alternatives to choose from.

Dr. Parveen NagpalReasons for Unsuccessful Closing
Wrong Attitude
Incomplete preparation or
presentation
External Interruption
Misinterpreting the prospect
Eagerness to Close
Untimely Close

Dr. Parveen NagpalTheories of Selling
Theories of selling are essentially behavioural theories. Three
major theories are generally distinguished :
I. Stimulus – Response Theory
II. Product Orientation Theory
III. Need Satisfaction Theory

Dr. Parveen NagpalStimulus – Response Theory
This theory states that if the salesperson uses the right stimulus,
the prospect will respond the way the salesperson wants him to
act.

Dr. Parveen NagpalProduct Orientation Theory
Product orientation deals with the quality of the product. The
salespeople assume that as long as product quality is good people
would buy it.
Under product orientation, company focuses on developing high
quality products which can be sold at the right price.

Dr. Parveen NagpalNeed Satisfaction Theory
Need is the fundamental concept present in all selling activities. It
arises because of absence of a product or service wherein an
individual fees deprived.
This theory is based on interactive approach. It enables
salespeople to first understand the customers stated and unstated
needs through investigative questions and careful listening.
The salespeople anticipate the features and product specifications
that will satisfy the customers and accordingly prepare the
salestalk.

Dr. Parveen NagpalSelling Skills
Selling
Skills
Communication
Skill
Listening
Skills
Conflict Management
Skills
Trust building
Skill
Problem Sovling
Skill
Negotiation
Skill

Dr. Parveen NagpalConflict Management in Sales
In sales organizations conflicts are unavoidable.
They can arise due to disagreement of targets, objectives and
priorities etc.
Conflicts can also arise between a customer and a salesperson or a
company and its channel intermediaries.
Conflicts can be of different forms or types.
It can be at various levels. At the organizational level, i.e. among
the managers, conflicts can be of five different types

Dr. Parveen NagpalConflict Management in Sales
1. Task Conflict: Disagreements between the managers over the
content of the job, may be among sales managers at different
levels.
2. Process Conflict: Conflict over how best to perform a task - a
choice between the alternatives.
3. Relationship Conflict: Common among sales managers, peers,
seniors and subordinates.
4. Functional Conflict: Among different functions or operations –
like between marketing and finance.
5. Dysfunctional Conflict: Negative conflict that affects the
functions, operations and performance.

Dr. Parveen NagpalMethods to Resolve Conflicts
Conflicts, whenever arise, should be resolved on time, in the
larger interest of business and sale. Nader and Todd have
identified eight methods for handling or resolving the conflicts:
1. Lumping: Inability or lack of desire of one party to pursue the
complaint. The problem is ignored and the relationship continues.
2. Avoidance: Refers to exit from the relationship between the
two parties.
3. Coercion: Imposing the decision or view point of one party on
another. Usually the weaker party accepts the decision.

Dr. Parveen NagpalMethods to Resolve Conflicts
4. Negotiation: The settlement of the issue is acceptable or
satisfactory to both the parties.
5. Meditation: Resolution of conflict by third party who helps the
two parties reach a settlement.
6. Arbitration: There is a third party, who is a arbitrator. He is
appointed on mutual consent and his decision is accepted by both
the parties.
7. Adjudication: Legal process for dispute settlement. The
adjudicator has the authority to intervene and give a decision that
is binding on both the parties.

Dr. Parveen Nagpal
NATIONAL SELLING INTERNATIONAL SELLING
1. National business id limited to the domestic territory. The international business is spread globally.
2. The competition is restricted to national or local or regional
level.
The competition is on global level.
3. The national business is conducted in local currency which is
stable.
The international business is conducted in foreign currency that
implies the exchange rate fluctuations.
4. Risk and uncertainty is more predictable. Risk and uncertainty is unpredictable.
5. Agents are normally local companies or individuals or
organizations. They can be big international operators.
Agents play an important role , they act as a catalyst for product
promotion or market development.
6. They have free access. They are regulated by the regional information or trading blocks.

Dr. Parveen Nagpal
Thank You
www.linkedin.com/in/dr-parveen-kaur-nagpal-82965b15

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