T30- Sales forecasting

• How does consumer trends affect sales forecasting?

  Businesses aim to meet the native consumers by providing products and services in a market economy. Successful businesses, anticipate and meet the needs of consumers by supplying goods and services are in demand at the point in time.
• How does seasonal variation affect sales forecasting?

  • Some products are seasonal, and that they are purchased in smaller or greater quantities at different times of the year. (E.g. ice cream van in summer)
• how do you present data with seasonal variation?

  Knowledge of the seasonal variation in cells is vital when constructing cells. This is important for management of a business for example when looking at cash flow businesses affected by seasonal factors. Use sales forecast to inform cash flow forecast and from these forecast will recognise when lower cells will occur and therefore lower cash flow during certain times of the year.
• how does fashion affect sales forecasting?

  Consumer and preferences change and can be highly unpredictable. Fashion-particularly in the area of clothing- changes constantly. This can make accurate sales for forecasting very difficult.
• how do long term trends affect sales forecasting?

  Whereas fashion can change in the short term, and with no notice, other changes to consumer behaviour and more long-term. E.g. The trend for consumers today to watch a film and TV on demand, and using mobile devices, has led growth of media platforms and the demise of operators, such as blockbuster
• how does economic growth affect sales forecasting?

  • Economic growth is judged, using gross domestic product (GDP). This is a measure of the total output of an economy when economic growth is rising cells for many businesses tend to increase.
  • One reason for this is the consumer incomes generally increased during periods of economic growth in this translates into higher spending.
• how do interest rates affect sales forecasting?

  • These are charged by banks and other financial institutions for borrowing money. When interest rates are high, the cost of loans increases and the demand for loans fall. Loans are used by consumers and businesses to fund purchases.
  • When interest rates arising cells may be adjusted downwards. Businesses might expect that there’s a month for the product will fall in contrast when interest rates for the cost of loans also falls. This means they are more attractive for consumers.
• What is inflation?

  The general rise and consumer prices overtime. When inflation is rising, this indicates the prices in the economy arising also. In such periods, consumers and businesses often choose to spend less.
• what is unemployment and how does it affect sales forecasting?

  The number of people who are out of work. during a recession, unemployment rises during the economic crisis that started in 2008 UK. Unemployment rose to almost 3,000,000 as a result, spending in the economy fell, and this made a huge impact on business, sales and orders.
• How does exchange rates affect sales forecasting?

  These reflect the value of the currency in terms of another. An exchange of £1 = US$1.45. Is the exchange rate rises to £1= US$1.60, it is cheaper for UK consumers to buy goods and services from the US. As a result, UK businesses might find it sells for due to increased price competitiveness of the US.
• when income rises, consumers tend to buy more goods and services.
• when unemployment falls (income) so does demand for clothes, tickets etc
• positive income elasticity is when incomes rise demand also rises