Quantitive Sales Forecasting Business

• What is the main focus of Topic 3.3.3 in the study material?

  Quantitative Sales Forecasting
• Why is it useful for marketers to know the relationship between sales and advertising expenditure?

  It helps predict how sales volume is affected by advertising efforts.
• What is plotted on the x-axis in a scatter diagram?

  Independent variable
• What is plotted on the y-axis in a scatter diagram?

  Dependent variable
• What is the purpose of the 'line of best fit' in a scatter diagram?

  It attempts to plot the mathematical relationship between the variables based on data points.
• What are the three kinds of possible correlation mentioned?

  Positive correlation, negative correlation, and no correlation.
• What does a strong correlation indicate about the data points and the line of best fit?

  There is little room between the data points and the line.
• What is a potential danger of relying on correlation in marketing predictions?

  Believing there is a causal link between two unrelated variables.
• What is an example of a misleading correlation mentioned in the study material?

  The link between daily temperature and ice-cream sales.
• What are some key factors that impact quantitative sales forecasting?

  Consumer trends, economic variables, and competitor actions.
• Why might sales forecasts be inaccurate according to the study material?

  Due to factors like being a new business or significant market disruptions.
• What is 'extrapolation' in the context of sales forecasting?

  The use of trends established by historical data to make predictions about future values.
• What is the basic assumption of extrapolation?

  The trend or pattern will continue into the future unless evidence suggests otherwise.
• How is a moving average calculated?

  By adding the latest four quarters of sales and dividing by four.
• What does the moving average help to indicate?

  The overall trend in quarterly sales.
• What are the benefits and drawbacks of extrapolation in sales forecasting?

  Benefits:

  • Simple method of forecasting
  • Requires minimal data
  • Quick and cost-effective

  
  

  Drawbacks:

  • Unreliable with significant fluctuations in data
  • Assumes past trends will continue
  • Ignores qualitative factors
• What is correlation in the context of sales forecasting?

  A method that looks at the strength of a relationship between two variables.
• What is the significance of the moving average in sales forecasting?

  It smooths out quarterly variations and indicates growth trends.