This course will help you understand what sales forecasting is and how to select the right forecasting techniques. Understand what sales forecasting is Step by step to create a sales forecast Qualitative and quantitative forecasting methods Check it out: https://www.experfy.com/training/courses/sales-forecasting

2. Sales Forecasting
Madhu Bhatia

3. Madhu Bhatia
• 12 Years of diverse experience with
Investment banks as well as BIG 4
• Provides advisory services to SME &
MSMEs in the areas of corporate
finance, strategic planning, capital
structure, working capital
management, and MIS reporting
• A CA from Institute of Chartered
accountants of India (ICAI) and an
MBA- Finance from IBS

4. Audience
• Marketing Management Professionals
• Sales Management Professionals
• Business Owners
• Anyone who wish to understand how to prepare
Sales forecast

5. • Introduction
oWhat is sales forecasting
oWhy is sales forecasting important
oEssentials of Sales forecasting
oAreas that benefits sales forecasting
• Factors that impact Sales forecast
oInternal Factors
oExternal Factors
Table of contents

6. • Preparing for a Sales forecast
oDefine the market
oSelect a forecast technique
• Sales forecasting Techniques – Part I
oQuantitative Forecasting
oData Collection
oRollover Techniques
oMoving Averages
oUnderstanding Smoothing
Table of contents

7. • Sales forecasting Techniques – Part II
oQualitative Forecasting
oExpert Opinion
oEstimates from Customers
oHistorical Analogy
oDelphi Method
Table of contents

8. • Common Methods to forecast Sales
oMethod I – Historical based Sales forecast with
example
oMethod II – Pipeline based Sales forecast with
example
oMethod III – Multi variable analysis with example
oMethod IV – Length of Sales cycle forecast with
example
Table of contents

9. • How to create Sales forecast
oSteps n Sales forecasting
oStrategies to create an accurate Sales forecasting
Model
oCase Study I
oCase Study II
• Summary & Conclusion
oSummary & Conclusion
Table of contents

10. Prerequisites
• Basic understanding of Marketing
• Basic Math skills
• Basic knowledge of Excel

11. • Understand what Sales Forecasting is
• Step-by-step process to create a Sales forecast
• Qualitative & Quantitative forecasting methods
• How to select the right forecasting technique
• Methods to forecast sales
What am I going to get from this course?

12. SECTION 1
Introduction

13. What is Sales Forecasting?
Introduction 13
Projections Multi Purpose
Much more than
number
Inform what to expect
and how to deal with
possible events
Sales
Forecasting

14. Importance of Sales Forecasting
Introduction 14
Financial Planning
Management
Inventory Controls
Cash Flow

15. Essentials of Sales Forecast
Introduction 15
Value of the
Sale
When it is
likely to close
Percentage
likely hood of
close

16. Areas that benefits Sales forecasting
Introduction 16
Sales
Forecasting
Cash Flow
Purchasing
Planning
Tracking

17. SECTION 2
Factors that impact Sales Forecast

18. Internal Factors
Factors that impact Sales Forecast 18
Capital
Human
Resource
Working
Capital
New
product
lines
Production
Capacity

19. Factors that impact Sales Forecast 19
External Factors
Economic
Factors
Consumer
factors
Rules &
Regulatio
ns
Political
events
Climate
Competit
ion

20. Quiz 1
Preparing for a Sales Forecast 20
S ltd was into making of appliances using steel as a raw material. S ltd
relied heavily on China for getting this Raw material. The US government
introduced a 25% tariff on steel imports applicable from the new
financial year. Identify the factor that would impact the sales forecast
A. Internal factor
B. External Factor
Ans – B External factor

21. SECTION 3
Preparing for a Sales forecast

22. Define the Market
Preparing for a Sales Forecast 22
• Define Market category
o Wide scope
o Narrow scope
• Trends
• Psychographics
• Competition

23. Preparing for a Sales Forecast 23
Market Dynamics
• Action of Competitors
• Legal changes
• Political decisions
• Consumer Preferences
• Technology

24. Quiz 2
Preparing for a Sales Forecast 24
C ltd has observed and identified a trend occurring in their
market category. So C ltd should now also
A. Understand the reason behind the trend
B. Identify ways to change the trend
Ans – A

25. SECTION 4
Sales Forecasting Techniques - Part I

26. Assumptions inherent in Forecasting
Sales Forecasting Techniques - Part I 26
• Same casual relationship existed in past
• Rarely perfect
• Accuracy would decrease as the time horizon increases
• Forecasts for Group of items more accurate then single items

27. Quantitative Forecasting
Sales Forecasting Techniques - Part I 27
• Statistical technique
• Based on Numbers and not expertise
• Helps to spot trends and forecast more accurately
• Respects history
• Eliminates inflated forecasts
• Types
• Time-Series Models
• Casual Model

28. Quantitative forecasts
Sales Forecasting Techniques - Part I 28
Advantages Disadvantages
More objective Cannot account for each
variable in the market
Easy to analyze Unexpected occurrences
Easy to interpret

29. Data Collection
Sales Forecasting Techniques - Part I 29
DataCollection
Historical
Information
Data Cleaning
Plotting the data
Acquisitions and
sell offs
Make the data
Consistent
0
2
4
6
8
10
12
14
16
18
20
0 5 10 15 20 25 30
Sales (mn $)

30. Rollover Technique
Sales Forecasting Techniques - Part I 30
• Also known as Naïve Method
• Projections based on past data
• Past Actual sales = Next Sales Forecast
• No adjustments to past periods
• File 1_01

31. Moving Averages
Preparing for a Sales Forecast 31
• Average value over a set time period
• Responsive to trend
• Weighted Moving Average
• File 1_02
Month Sales (in’000) Weights
Jan 5,000 0.1
Feb 2,500 0.2
Mar 3,500 0.3
Apr 4,500 0.4

32. Understanding Smoothing
Preparing for a Sales Forecast 32
• Frequently used method by experts
• Data needed -:
o Last period’s actual sales (A)
o Current Period forecast (F)
o Weighting factor (S)
• File 1_03

33. Casual Models
Sales Forecasting Techniques - Part I 33
• Dependent & Independent variable
• Cause & effect relationship
• Regression Model
• Multiple Regression
• File 2_01

34. Quiz 3
Preparing for a Sales Forecast 34
Before selecting a sales forecasting technique what should we ask?
A. What are methods used earlier?
B. How much data we have about the past sales
C. How well is the market understood by the companies sales people
D. All of above
Ans – D

35. Quiz 4
Preparing for a Sales Forecast 35
A ltd served Europe, US and Asian markets in 2000. However, they
withdrew from European markets in 2011. A ltd while preparing
sales forecast for 2018 -
A. Ignore historical data with regards to European markets
B. Include sales made in European markets in the historical data
Ans – A