Sales forecasting

• • Is the art or science of predicting future demand by anticipating what consumers are likely to do in a given set of circumstances
• • Allows businesses to predict sales, and once a business has what it believes is an accurate estimate of future sales it can then predict HRM needs, finance needs, estimate the quantity and cost of purchases and raw materials as well as determining production levels
• • It is useful as estimating what is likely to happen in order to position the business to take advantages of opportunities is wise. HOWEVER, the future can't be predicted accurately
• Factors that can affect its reliability:

  • Economic factors- such as unemployment, inflation, interest rates, exchange rates ect. A change in any of these economic variables could reduce the accuracy of the sales forecast
• • Consumer factors: Consumers' tastes and fashions are constantly changing and businesses try to anticipate these changes through market research. However, consumers can be unpredictable and their preferences can change quickly
• • Competition factors: Businesses cannot control the actions of their competitors. They will have plans for the future and any significant action by competitors could reduce the accuracy of sales forecasting