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Sales Forecasting Methods

This document discusses three methods for sales forecasting: jury of executive opinion, sales force opinion, and test marketing result. The jury of executive opinion method involves experienced executives estimating sales based on their market knowledge and experience. The sales force opinion method collects estimates from salespeople in different territories. The test marketing result method bases forecasts on results from limited test introductions of products in certain areas. Each method has merits like utilizing specialized knowledge or being reliable, but also drawbacks such as not being based on factual data or results varying by non-homogeneous markets.

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Raghvendra Chauhan
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193 views

Sales Forecasting Methods

This document discusses three methods for sales forecasting: jury of executive opinion, sales force opinion, and test marketing result. The jury of executive opinion method involves experienced executives estimating sales based on their market knowledge and experience. The sales force opinion method collects estimates from salespeople in different territories. The test marketing result method bases forecasts on results from limited test introductions of products in certain areas. Each method has merits like utilizing specialized knowledge or being reliable, but also drawbacks such as not being based on factual data or results varying by non-homogeneous markets.

Uploaded by

Raghvendra Chauhan
Copyright
© © All Rights Reserved
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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Jury of Executive Opinion:

This method of sales forecasting is the oldest. One or more of the


executives, who are experienced and have good knowledge of the
market factors make out the expected sales. The executives are
responsible while forecasting sales figures through estimates and
experiences. All the factors-internal and external—are taken into
account. This is a type of committee approach. This method is
simple as experiences and judgement are pooled together in taking
a sales forecast figure. If there are many executives, their estimates
are averaged in drawing the sales forecast.

Merits:
(a) This method is simple and quick.

(b) Detailed data are not needed.

(c) There is economy.

Demerits:
ADVERTISEMENTS:

(a) It is not based on factual data.

(b) It is difficult to draw a final decision.

(c) More or less, the method rests on guess-work, and may lead to
wrong forecasts.

(d) It is difficult to break down the forecasts into products, markets,


etc.

2. Sales Force Opinion:


Under this method, salesmen, or intermediaries are required to
make out an estimate sales in their respective territories for a given
period. Salesmen are in close touch with the consumers and possess
good knowledge about the future demand trend. Thus all the sales
force estimates are processed, integrated, modified, and a sales
volume estimate formed for the whole market, for the given period.

Merits:
(a) Specialized knowledge is utilized.

(b) Salesmen are confident and responsible to meet the quota fixed.
(c) This method facilitates to break down in terms of products,
territories, customers, salesmen etc.

Demerits:
(a) Success depends upon the competency of salesmen.

(b) A broad outlook is absent.

(c) The estimation may be unattainable or may to too low for the
forecasts as the salesmen may be optimistic or pessimistic.

3. Test Marketing Result:


Under the market test method, products are introduced in a limited
geographical area and the result is studied. Taking this result as a
base, sales forecast is made. This test is conducted as a sample on
pre-test basis in order to understand the market response.

Merits:
(a) The system is reliable as forecast is based on actual result.

(b) Management can understand the defects and take steps to


rectify.

(c) It is good for introducing new products, in a new territory etc.

Demerits:
(a) All the markets are not homogeneous. But study is made on the
basis of a part of a market.

(b) It is a time-consuming process.

(c) It is costly.

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