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Sales Management 8. Estimating Demand. Market Potential. Sales. Industry Forecast. (Industry Forecast ≤ Market Potential). (Company Forecast ≤ Company Potential). Company Potential. Company Forecast. 0. Time. Key Terms. Market Potential: All possible ______

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Sales management 8

Sales Management 8

Estimating Demand


Market Potential

Sales

Industry Forecast

(Industry Forecast ≤ Market Potential)

(Company Forecast ≤ Company Potential)

Company Potential

Company Forecast

0

Time


Key terms
Key Terms

  • Market Potential: All possible ______

  • Industry Forecast: Likely _________, all companies

  • Company Potential: All possible _________for one company

  • Company Sales Forecast: Likely company _________

    NB: All figures are expressed for a period of ___.


So how do you estimate demand
So how do you estimate demand?

  • Determine WHO will use the product.

    • Which segment(s)?; Size?

  • Determine their RATE of use.

    • New/Replacement; Frequency.

  • WHO buys product?

    • Purchasing agent, parent, lover, uncle

  • WHAT is their motivation to purchase?

    • Life event, new business, new market, fun


Why forecast sales
Why Forecast Sales?

  • Allocate _________

  • Control _________

  • Project Cash Flow (Important!)

  • Capital/operating budgets

  • Production schedules & _________control

  • Hiring; collective _________

  • Planning marketing and sales plans


Methods of forecasting
Methods of Forecasting

  • Subjective

    • Users’ Expectations

    • Sales Force Composite

    • Jury of Executive Opinion

      • Delphi Technique


Users expectations
Users’ Expectations

  • Also called Buyers’ _________method

  • __________________

  • _________

  • Intention ≠ Behavior, but does correlate


Sales force composite
Sales Force Composite

  • Salespeople are _________

  • Close to customers, competitors

  • Fingers on the pulse of the market

  • Survey sales force, and add up estimates

  • Good starting point; need adjustment


Jury of executive opinion
Jury of Executive Opinion

  • Top/key _________, perhaps outside consultants, give best estimate

  • Not boundary spanners, but see “Big Picture”

  • May need discussion to reach an estimate that everyone can agree on


Delphi technique
Delphi Technique

  • Similar to Executive Opinion

  • _________Process

  • _________


Methods of forecasting1
Methods of Forecasting

  • Objective

    • Market Test

    • Time Series Analysis

      • Moving Averages

      • Exponential Smoothing

      • Decomposition

    • Statistical Demand Analysis


Test market
Test Market

  • Pick “_________” city

  • Full marketing effort

  • _________results to rest of nation

    Disadvantages:

  • _________

  • _________

  • _________

  • _________


Time series analysis
Time Series Analysis

  • Use historical (not hysterical) data to predict future

  • Like driving by looking in the rear-view mirror

  • Estimate starts in “ballpark” (not the franks)


Moving averages
Moving Averages

  • Average last n (=2,4, whatever) years sales to predict the coming year

    2000: 5,000 units

    2001: 8,000 units

    2002: 6,500 units estimated


Decomposition
Decomposition

  • Apply to monthly or quarterly data

  • Account for:

    • _________

    • _________

    • _________

    • _________


Statistical demand analysis
Statistical Demand Analysis

  • Use regression or other techniques to determine relationship between sales and predictor factors.

  • Need good data and analytical skills.

  • Example:

    • Home heating oil demand = Function of temperature, sun, last fill, tank size, & history.


What do companies use
What do companies use?

  • They tend to rely more heavily on qualitative than quantitative.

  • Especially sales force composite and jury of executive opinion.

  • Easier, quicker, perhaps accurate enough


Sales territories
Sales Territories

  • Design territories

    • Need a market index to compare

  • Industrial Goods

    • Standard Industrial Classification

    • North American Industrial Classification System

  • Consumer goods

    • Buying Power Index = (5I + 2P + 3R)/10

      • % disposable personal Income

      • % US Population

      • % total Retail sales


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