Sales Forecasting

Sales Forecasting

1. What is it?

   • A sales forecast is an attempt to accurately estimate future sales. It is important as it forms the basis of all the other plans of the business, human resources, cash flow forecast, production plan and profit forecast

2. Factors affecting sales forcasting

   • - Sales of the products they use (e.g. ice-cream van, the price of the ice-cream could depend on the cost of milk from dairy farmers as they are a variable cost)
   • - Time of year
   • - Economy
   • - Consumer trends
   • - Actions of competitors

3. Consumer trends

   • - Busy lifestyles – increase in sales of fitness products
   • - Importance of fitness and body image – increase in online shopping, take away, processed food
   • - Affluence – idea of buying water was unthinkable in the past, eating out; worldwide holiday
   • - Ageing population
   • - Globalisation
   • - Fashion

4. Economic variables

   • - Interest rate – higher buy less. Falls sales increase
   • Exchange rate
   • Inflation
   • - Level of unemployment
   • - State of the economy (recession or growth)