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DEMAND MEASUREMENT &
SALES FORECASTING..
BY, RADHA D.
BHA 6TH SEM
 DEFINITION:
• Sales forecast is an estimate of sales, in monetary or physical units, for a
specified future period, with a chosen marketing plan, under an assumed
set of economic and marketing environmental forces.
• By providing estimates of market trends, industry demand, and
company sales possibilities for a product, sales forecasting serves as a
starting point for all business activities of a company.
• Forecasting and Demand Measurement requires an analysis of the
market with an aim of expressing it in quantitative (numeric) quantities
both present and in the future.
• Following marketing decisions are based on sales forecasting:
1. Number of salesman required to achieve sales quotas or objectives.
2. Allocation of sales quota to each salesman.
3. Determination of sales force compensation plan.
4. Determination of sales territories based on market potential.
5. Advertising and sales promotion programmes.
6. Physical distribution and channel selection.
7. Pricing decisions and strategy.
8. Production plans.
9. Inventory control, purchasing & budgeting.
10. Estimating standard costs.
• Marketing mix revolves around sales forecasts made by company for its
products.
 WHICH MARKET TO MEASURE:
Market – set of all actual & potential customers
•Potential Market: profess sufficient level of interest in a defined
market offer. Customers should also have purchasing power and
access to the product offer.
•Available: Consumers who have interest, income, & access to offer.
•Target: Part of qualified market the company decides to serve.
•Penetrated Market: Set of consumers who have already purchased
the product.
MAJOR CONCEPTS IN DEMAND
MEASUREMENT:
for a product-is the total volume that
would be bought by a target group of customers in a target
geographical area in a specified time period in a specified marketing
environment under a specific marketing program.
Only the minimum level of industry
marketing expenditure and efforts will actually occur.
is the highest limit approached by
market demand as industry marketing expenditures approach
infinity for a given marketing environment.
It is the company’s estimated share of market
demand at alternative levels of company marketing effort in a given
time period.
Expected level of company sales
based on a chosen marketing plan and an assumed marketing
environment.
• Sales quota-which is the sales goal set for a product line, company
division or sales officer.
• Sales budget is the estimate of the expected volume of sales and is
used for making current purchasing, production, and cash flow
decisions.
This is the sales limit
approached by company demand as the company’s marketing effort
increases relative to that of competitors. The absolute limit of company
demand is the market potential.
 DEMAND CAN BE ESTIMATED AT VARIOUS
LEVELS:
1. TOTAL VOLUME OF SERVICES:
• How many patients will be attending OPD each day on an
average?
• What percentage of these will be going for investigations?
• What type of investigations will they require?
• How many will require inpatient facility?
• What percentage will be needing facilities for prolonged
treatment and chronic illness?
• Depending upon the facilities available in each hospitals, how many
patients will have to be referred? where ?
• Whether the referral hospital has the potential and culture which will
match with the expectations of the client?
2. THE GEOGRAPHICAL LEVEL
• What is the present volume of services in the target area?
• What is the present volume of services in another city with similar
conditions and environment?
3. THE TIME LEVEL
• What will be the demand for the service next year?
• What will be the demand in 3-5 years time?
• What will be the demand after 10 years?
1. MEASURING MARKET DEMAND : Is the total sales
volume that all companies selling a product during a specified period of
time in a specified market could expect to achieve under ideal
conditions. It is the achievable portion of ultimate market potential.
2. FORECASTING COMPANY SALES: A portion of market
demand that a specific company could expect to achieve under ideal
conditions.
• For e.g., Market demand applies to all televisions, but company sales
potential refers only to a single brand.
 STEPS IN FORECASTING:
3. SALES FORECAST:
• It is an estimate of the sales possibility of a company’s brand or product
during a specific period, in a specific market, under a specific
marketing plan and environment, expressed in monetary or unit terms.
 METHODS OF SALES FORECASTING:
1.OPINION OF EXECUTIVES: Based on the personal
knowledge, market information through customer contacts or by reading
published data.
2.SALES FORCE COMPOSITE METHOD: Based on the
estimates given by salesmen, which are taken into consideration by sales
manager for a territory, region & company.
3.CUSTOMER’S EXPECTATIONS: Customers can be
requested to communicate their buying intentions in the coming
period . This is suitable for businesses selling products to a few key
customers.
4. STATISTICAL SAMPLING: To get total sales estimate.
Based on sampling survey done in representative sub-groups of
territories, data can be generalized to estimate the forecast.
5. CORRELATION ANALYSIS : When there is a correlation
between sales volume and a well known economic indicator or index.
High correlation is derived by the index values which indicates future
sales volume. E.g., Sales of petrol are related to auto mobile sales.
6.TIME SERIES ANALYSIS: Involves breaking past sales
down into 4 components:
a) The Trend- are sales growing, flat- lining or decline?
b) Seasonal or Cyclical Factors- Sales are effected by sudden
swing in the general economic activity (e.g., increase in
disposable income of consumers may lead to increase in sales
for products in a particular industry. These factors occur in a
regular pattern.
c) Erratic Events- Like strikes, fashion fads, war scares and
other disturbances to the market which need to be isolated
from past sales data in order to be able to identify the more
normal pattern of sales.
7. THE DELPHI METHOD: An expert opinion method
used especially for working out board- based, futuristic
estimates rather than sales forecast.
• In this method, a panel of experts in the field is
interviewed with the help of a questionnaire and their
reactions and opinions recorded. An analysis of the results
gives the final estimates.
• Since, no single forecast method is perfect, companies use
combination of forecasting methods to ensure that they get
a reliable estimate.
CASE STUDY ON ASIAN PAINTS SALES
FORECAST
THANK YOU!

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Demand measurement & sales forecasting

  • 1. DEMAND MEASUREMENT & SALES FORECASTING.. BY, RADHA D. BHA 6TH SEM
  • 2.  DEFINITION: • Sales forecast is an estimate of sales, in monetary or physical units, for a specified future period, with a chosen marketing plan, under an assumed set of economic and marketing environmental forces. • By providing estimates of market trends, industry demand, and company sales possibilities for a product, sales forecasting serves as a starting point for all business activities of a company. • Forecasting and Demand Measurement requires an analysis of the market with an aim of expressing it in quantitative (numeric) quantities both present and in the future.
  • 3. • Following marketing decisions are based on sales forecasting: 1. Number of salesman required to achieve sales quotas or objectives. 2. Allocation of sales quota to each salesman. 3. Determination of sales force compensation plan. 4. Determination of sales territories based on market potential. 5. Advertising and sales promotion programmes. 6. Physical distribution and channel selection. 7. Pricing decisions and strategy. 8. Production plans. 9. Inventory control, purchasing & budgeting. 10. Estimating standard costs. • Marketing mix revolves around sales forecasts made by company for its products.
  • 4.  WHICH MARKET TO MEASURE: Market – set of all actual & potential customers •Potential Market: profess sufficient level of interest in a defined market offer. Customers should also have purchasing power and access to the product offer. •Available: Consumers who have interest, income, & access to offer. •Target: Part of qualified market the company decides to serve. •Penetrated Market: Set of consumers who have already purchased the product.
  • 5. MAJOR CONCEPTS IN DEMAND MEASUREMENT: for a product-is the total volume that would be bought by a target group of customers in a target geographical area in a specified time period in a specified marketing environment under a specific marketing program. Only the minimum level of industry marketing expenditure and efforts will actually occur. is the highest limit approached by market demand as industry marketing expenditures approach infinity for a given marketing environment.
  • 6. It is the company’s estimated share of market demand at alternative levels of company marketing effort in a given time period. Expected level of company sales based on a chosen marketing plan and an assumed marketing environment. • Sales quota-which is the sales goal set for a product line, company division or sales officer. • Sales budget is the estimate of the expected volume of sales and is used for making current purchasing, production, and cash flow decisions. This is the sales limit approached by company demand as the company’s marketing effort increases relative to that of competitors. The absolute limit of company demand is the market potential.
  • 7.  DEMAND CAN BE ESTIMATED AT VARIOUS LEVELS: 1. TOTAL VOLUME OF SERVICES: • How many patients will be attending OPD each day on an average? • What percentage of these will be going for investigations? • What type of investigations will they require? • How many will require inpatient facility? • What percentage will be needing facilities for prolonged treatment and chronic illness?
  • 8. • Depending upon the facilities available in each hospitals, how many patients will have to be referred? where ? • Whether the referral hospital has the potential and culture which will match with the expectations of the client? 2. THE GEOGRAPHICAL LEVEL • What is the present volume of services in the target area? • What is the present volume of services in another city with similar conditions and environment? 3. THE TIME LEVEL • What will be the demand for the service next year? • What will be the demand in 3-5 years time? • What will be the demand after 10 years?
  • 9. 1. MEASURING MARKET DEMAND : Is the total sales volume that all companies selling a product during a specified period of time in a specified market could expect to achieve under ideal conditions. It is the achievable portion of ultimate market potential. 2. FORECASTING COMPANY SALES: A portion of market demand that a specific company could expect to achieve under ideal conditions. • For e.g., Market demand applies to all televisions, but company sales potential refers only to a single brand.  STEPS IN FORECASTING:
  • 10. 3. SALES FORECAST: • It is an estimate of the sales possibility of a company’s brand or product during a specific period, in a specific market, under a specific marketing plan and environment, expressed in monetary or unit terms.  METHODS OF SALES FORECASTING: 1.OPINION OF EXECUTIVES: Based on the personal knowledge, market information through customer contacts or by reading published data. 2.SALES FORCE COMPOSITE METHOD: Based on the estimates given by salesmen, which are taken into consideration by sales manager for a territory, region & company.
  • 11. 3.CUSTOMER’S EXPECTATIONS: Customers can be requested to communicate their buying intentions in the coming period . This is suitable for businesses selling products to a few key customers. 4. STATISTICAL SAMPLING: To get total sales estimate. Based on sampling survey done in representative sub-groups of territories, data can be generalized to estimate the forecast. 5. CORRELATION ANALYSIS : When there is a correlation between sales volume and a well known economic indicator or index. High correlation is derived by the index values which indicates future sales volume. E.g., Sales of petrol are related to auto mobile sales.
  • 12. 6.TIME SERIES ANALYSIS: Involves breaking past sales down into 4 components: a) The Trend- are sales growing, flat- lining or decline? b) Seasonal or Cyclical Factors- Sales are effected by sudden swing in the general economic activity (e.g., increase in disposable income of consumers may lead to increase in sales for products in a particular industry. These factors occur in a regular pattern. c) Erratic Events- Like strikes, fashion fads, war scares and other disturbances to the market which need to be isolated from past sales data in order to be able to identify the more normal pattern of sales.
  • 13. 7. THE DELPHI METHOD: An expert opinion method used especially for working out board- based, futuristic estimates rather than sales forecast. • In this method, a panel of experts in the field is interviewed with the help of a questionnaire and their reactions and opinions recorded. An analysis of the results gives the final estimates. • Since, no single forecast method is perfect, companies use combination of forecasting methods to ensure that they get a reliable estimate.
  • 14. CASE STUDY ON ASIAN PAINTS SALES FORECAST
  • 15.
  • 16.
  • 17.
  • 18.
  • 19.
  • 20.
  • 21.

Editor's Notes

  1. Sales forecast in the prediction of future demand of products. For this market analysis and market research is important. Every Company wants to know the existing status of its products in the market and the future prospects. The company also wants to know what prospects for its sales during a specific period are and whether there is scope to increase sales and market share in the future, & if so, to what extent.
  2. 1.Sales quota – sales goal set for a product line, company division, or sales representative. 3. Ascertaining the salaries for the salesman.
  3. Potential market is the part of the total population that has shown some level of interest in buying particular product or service. Target market or served market is the part of the available market the company decides to pursue Penetrated market is the set of consumers who are buying the company’s product.
  4. FORECAST-Expected level of company sales based on a chosen marketing plan and an assumed marketing environment. Sales quota-which is the sales goal set for a product line, company division or sales officer. Sales budget is the estimate of the expected volume of sales and is used for making current purchasing, production, and cash flow decisions.
  5. Lacks in scientific validity. Since salesman have direct contact with the customers and first- hand field information, They can estimate their future buying intentions.