2.2.1 Sales Forecasting

• Sales forecast: A prediction of future sales based on historical sales data and current market conditions.

  Uses:

  • Finance - mains source of cash inflows making it important for cashflow forecasts & needed to gain external finance
  • Marketing - uses of different marketing methods can drive sales up
  • Resources - can help them determine what & how many supplies they need as well as how to allocate them (E.g. staff & machinery)
• Factors affecting sales forecast:

  • consumer trends:
  • demand changes depending on trends
  • affect overall market demand & shares of existing competitors
  • actions of competitors:
  • hard to predict
  • often a significant reason for over optimistic forecasts
  • economic variables:
  • exchange rates, interest rates, taxation
  • overall strength of the economy (GDP growth)