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& Budgeting
Chapter 9 &10
1
Sales Forecast
It is estimate of a company’s sale for a specified
future period.
2
Human resource executives use sales forecasts
to project staffing needs, financial executives use
it in establishing and controlling operating and
capital budgets, and production manager uses it
to schedule purchasing and production to control
inventories.
3
Sales Forecasting Concepts
4
Market Potential – it is the highest possible expected
industry sales of a good or service in a specified market
segment for a given time period.
e.g. the market potential for the sales of antifreeze in New
England might be 20 millions gallons annually. (Based on
buyers ability to buy and willingness to buy)
5
Sales Forecasts – is the sales estimate the company actually
expects to obtain, based on the market conditions, company
resources, and the firms marketing plan. The sales forecast is
less then the sales potential since it is based on realistic set of
circumstances.
6
Product Life Cycle
8
1. Forecasting General Economic Conditions
9
2. Estimating Industry Sales
10
3. Estimating Company and Product Sales
11
Qualitative Methods
14
(iv) Survey of Buyer’s Intention
15
Quantitative Methods
17
Sales Budgeting
18
Types of Budget
7. Completion of Projections – here all the input and requests from various
units of the sales function are assembled and tied into a comprehensive
package.
8. Presentations and Review –present and defend its sales budget proposal
to the management.
10. Budget approval – final levels are eventually approved and authorized
for both the sales and the selling expense budgets. Here onwards budgets
are reviewed periodically looking at the on going market conditions and other
external forces. 23