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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

slide2

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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