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Sales Management

Sales Management. Sales Forecasting Topic 13. Sales Forecasting. What is it? Why do it? Qualitative vs Quantitative Goal = Accuracy Commonly Done by Marketing. Forecasting Overview. Hard to do, but must be done Shorter Time Frames are more accurate Harder for New Products

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Sales Management

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  1. Sales Management Sales Forecasting Topic 13

  2. Sales Forecasting • What is it? • Why do it? • Qualitative vs Quantitative • Goal = Accuracy • Commonly Done by Marketing

  3. Forecasting Overview • Hard to do, but must be done • Shorter Time Frames are more accurate • Harder for New Products • No Substitute for Actual Demand • Done for Each Product, Territory, ….. • Multiple Methods often used

  4. Goal is…. • Accuracy • Accuracy • And • Accuracy

  5. Mean Absolute % Error (MAPE) • Why Mape (or MSE)? • All past forecasts • Does not control for external shocks

  6. Patterns • Trend • Seasonality • Cycle • Outliers

  7. Market Potential • Buying Power Index • NAICS • Trade Press • Chain Ratio • Leading Indicators

  8. Qualitative Methods • Turning Points & Shocks • Sales Force Composite • Jury of Executive Opinion • Survey of Customer Buying Intentions

  9. Quantitative Methods • Strong & Weak Points • Seasonal Adjustments • Naïve • Moving Averages • Exponential Smoothing • Other Methods

  10. Naïve Method • Previous Period = Forecast • More Accurate than you think

  11. Moving Averages • 2PMA • 3PMA • Ex 2PMA: • t1 = 100 • t2 = 150 • Forecast = 125

  12. Exponential Smoothing • 2 Formulas • Usually High Alpha (why done)

  13. Exponential Smoothing Example • Alpha = 0.9 • 2020 = 1000 • 2021 = 1200 • 2022 = 1100 • 2022 forecast = .9 (1200) + .1 (1000) = 1180 • 2023 forecast = .9 (1100) + .1 (1180) = 1108

  14. Regression • Dependent vs Independent Variables • Can you get data? • Better than using dependent variable alone?

  15. Trend Projections • Why Done • Problems With

  16. Most Firms Use > 1 Method

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