FORCASTING IS THE EVERY BASIS OF PLANNING. IT REFERS TO A SYSTAMATIC ANALYSIS OF POST AND PRESENT CERCUMSTANCES WITH THE AIM OF DRAWING CONCLUSION ABOUT THE FUTURE COURCE OF EVENT. SALES FORCASTING HELPS IN THIS DIRECTION AS IT PLAY AN IMPORTANT ROLE IN FORCASTING METHODS.
FORCASTING IS THE EVERY BASIS OF PLANNING. IT REFERS TO A SYSTAMATIC ANALYSIS OF POST AND PRESENT CERCUMSTANCES WITH THE AIM OF DRAWING CONCLUSION ABOUT THE FUTURE COURCE OF EVENT. SALES FORCASTING HELPS IN THIS DIRECTION AS IT PLAY AN IMPORTANT ROLE IN FORCASTING METHODS.
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FORCASTING IS THE EVERY BASIS OF PLANNING. IT REFERS TO A SYSTAMATIC ANALYSIS OF POST AND PRESENT CERCUMSTANCES WITH THE AIM OF DRAWING CONCLUSION ABOUT THE FUTURE COURCE OF EVENT. SALES FORCASTING HELPS IN THIS DIRECTION AS IT PLAY AN IMPORTANT ROLE IN FORCASTING METHODS.
Copyright:
Attribution Non-Commercial (BY-NC)
Available Formats
Download as DOCX, PDF, TXT or read online from Scribd
FUTURE IS ALWAYS UNCERTAIAN. IT WOULD BE NO DIFFERENCE FROM WHAT
IT IS NAD DIFFERENT FROM WHAT ONE EXPECT TO BE. THEREFOR, THE MANAGER NEED TO FORCAST THE LIKELY FUTURE. NOW, BEFORE WE ADVANCE TO SALES FORCASTING WE MUST HAVE THE IDEA OF FORCASTING.
FORCASTING IS THE EVERY BASIS OF PLANNING. IT IS ESSINTIAL A
TECHINIQUE OF ANTICEPATION. IT REFERS TO A SYSTAMATIC ANALYSIS OF POST AND PRESENT CERCUMSTANCES WITH THE AIM OF DRAWING CONCLUSION ABOUT THE FUTURE COURCE OF EVENT.
ACCORDING TO ALLEN L.A
‘FORCASTING IS A SYSTAMATIC ATEMPT TO PROB THE FUTURE BY
INFLUENCE FROMKNOWN FACTS’.
ACCORDING TO MC FARLAND
‘FORCAST THE PREDECTION OR ESTIMATION OF THE CHANGE IF ANY IN
CHARACTESTIC ECONOMIC PHENOMINA WHICH MAY AFFECT THE PLAN’.
MEANING FO SALES FORCAST
BUSINESS BY NATURE HAS AN ELEMENT OF UNCERTAINLY WHICH GIVE RISK
TO RISK. THIS RISK CANNOT BE ALTOGATHER ELIMINATED BUT THROUGH PLANNING AND BUDGETING IT CAN BE REDUCE TO MINIMUM LEVEL. SALES FORCASTING HELPS IN THIS DIRECTION AS IT PLAY AN IMPORTANT ROLE IN FORCASTING METHODS.
TWO TYPE OF FORCASTING METHOD ARE USED TO PREPARE THE
SALES FORCAST:-
A. QUALITATIVE OR JUDJEMENTTAL METHODS.
B. ANALYTICAL AND STATICAL METHODS.
A. QUALITATIVE OR JUDJEMENTAL METHODS
UQALITATIVE OR JUDJEMENTAL METHODS CONSIDERED FACTORS RELATED EDPERTISE AND HUMAN JUDJEMENT. THESE METHOD HAVE THE ADVANTAGE OF ADJUSTING TO SUDDEN SHIFT IN ENVIRONMENT CIRCUMSTSNCES.
THE VARIOUS QUALITATIVE AND JUDJEMENTAL METHODS ARE USE :
I. COMPANY’S SALES FORCE OPTION.
II. EXPERT OPTION. III. SURVEY’S OF BUYER’S OPTIONS. IV. MARKETS TEST RESPONSE METHOD. V. DELPHI TECHINIQUE TECHINIQUE. NOW, WE SHALL ELABOURATE EACH OF THEM:
I. COMPANY’S SALES FORCE OPTION:-
THIS IS A BUILT UP METHOD OF PREPARING A SALES FORCAST THE ASSUMPTION IN USING THIS METHOD IS THAT SELES PEOPLE ARE THE COMPANY’S AMBASDOR IN CLOSE CONTACT WITH CUSTOM AND PREVELLING MARKET CONDITION NAD BEST QULIFIED TO ESTIMATE FUTURE SALES IN THERE INDIVIDUAL TERRITORIES. LIMITATION THE MAJOUR LIMTATION IN THIS METHODS ARE: a. POOR JUDJEMENT OF SALES PERSIONS ABOUT FUTURE SALES BECAUSE OF THEIR EMOTIONAL INVOLEMENTS.. b. SALES FORCE MAY NOT BE AWARE OF ECONOMIC DEVELOPMENT’SGROWTH PLANS, ECONOMIC STAGNATION AND POLICIES. c. SALES FORCE MAY NOT HAVE TIME OR SERIOUS COMCERN TO APPER THEIR MIND TO PLAN, COLLECT AND ASSTIMATE DATA FOR ESTIMATION FOR FORCASTING. I. EXPERT OPTION THIS IS PERHAPS THE OLDEST METHOD TO PREPARE A SALES FORCAST, THIS METHOD UTILISES THE EXPERT OPTION OF PEOPLE WHO ARE DIRECTLY ASSOCICATE WITH THE COMPANY OR THE INDUSTRY’S PRODUCT AND SERVICES. THE EXPERT OPTION METHOD MORE RELIABLE AND CONFIDENT LEVEL OF ACCURACY IS MORE THAN OTHER METHODS. THE FORCAST CAN BE DONE VERY QUACKLY AND ARE NOT VERY EXPANCIV. THIS METHOD IS FREQUENTLY USE FOR NEW PRODUCT WHERE BASIC DATA OR POST DATA IS NOT AVILABLE. LIMITATION a. THE FORCAST IS RELIABLE ONLY TO THE EXTANT OF CORRECTNESS OF THE JUDJEMENT OF COMMITY MEMBER AND ALSO THE EXTANT OF HAVING SUFFICENT UPDATE MARKET KNOLEDGE OR CURRENT INFORMATION ON WHICH TO BASE THEIR FORCAST. b. ALSO’ THE EXPERTS MAY BE TOO BUYER TO GIVE THEIR OPTION AND DATA IN A REALISTIC MANNER. I. SURVEY OF BUYER INTENTIONS THE BUYER IN THE MARKET CAN BE IMPORTANT SOURCES OF INFORMATION ABOUT THEIR RESPOUNCE TO PRODUCTS IN THE MARKET AND ALSO THERE PURCHASE INTENTION IN IMMIDEATE FUTURE AND FOR THE NEXT FEW YEAR. THIS METHOD USE FOR DETERMINING AND MEASURING FORCAST FOR PURCHASE OF AUTOMOBILE MOBILE PHONE AND NEW APPERTMENTS, CREDIT CARD AND OTHER CONSUMER HOSEHOLD PRODUCTS. LIMITATION a. CONSUMER MAY NOT GIVE THEIR FRANK OPTION AND MAY NOT REVEAL THEIR INTENTION SO CELERALY. b. IT IS NOT POSSIBLE TO CONTACT EVEN A SUSTINABLE PORTION OF TOTAL BUYERS IN THE MARKET. I. MARKET TEST RESPONSE METHOD THIS METHOD INVOLVES MAKING THE PRODUCT AVAILABLE TO POTENTIAL CUSTOMER IN ONE OR MOVE TEST MARKETS TO MESURE THEIR RESPONSE TO PRICE, PROMOTION AND DISTRIBUTION. THIS IS A GOOD METHOD IS IS THAT IT IS EXPANCIVE AND TIME TAKING AND MAY NOT REFLECT THE THE TOTAL MARKET II. THE DELPHI TECHINIQUE THIS TECHINIQUE CANVAS OPTION FROM EXPERINCED EXECUTIVE MEMBER OF THE ORGANISATION BY STRUCTERED RESURCH METHOD MAKING USE OF A QUESTION MARK. THE EXCUTIVE DO NOT MEET THE COMMETY AND THEREFOR THE RESPODENT BY THE GROUP DYNIMICSOF THE COMMITTEE’S SITUATION. THE APPORACH CAN BE VARIED IN THAT PERSION INTERVIEW MAY BE CONDUCTED WITH EACH RESPONDENT AT THE FEED BACK STAGE RATHER THAN THE IMPERSIONAL DISTRIBUTION OF FEED BACK NOTE AND FURTHER QUESTIONARIES MAY PROCEED FROM THE MICRO STAGE OF FORCASTING. THIS METHOD HAS BEEN FREQUIENTLY USED AND WHILE SOME OBSERVES FEEL THAT DELPHI IS BETTER SUITED TO ESTIMATED OF GENERAL TREND IN MARKET AND TECHNOLOGY RATHER THAN TO DECIDED ESTIMATES OF INDIVIDUAL PRODUCT SALES. THIS METHOD HAS THE ADVANTAGES OF ELIMINATING GROUP PRESSURE OF A COMMITTEE DISCUSSION. B.ANALYTICAL AND STATISTICAL METHOD BUSINESS FIRMS USE A VERITY OF ANALYTICAL AND STATICALS METHOD FOR FORCASTING THE SALES. HOWEVER, IT MUST BE POINTED OUT THAT USING STATICAL METHOD IS NOT SIMPLE AND ONLY EXPERINCED HAND CAN USE METHOD PROPERLY. THE ANALYTICAL AND STATICAL METHODS USE THE: I. MOVING AVERAGE METHOD. II. EXTRAPOLATION METHOD. III. SIMPLE PROJECTION METHOD. IV. EXPONENTAL SMOOTHING METHOD. V. REGRESSION METHOD. VI. TIME SERIES ANALYSIS. VII. ECONOMATRIC MODELS. I. MOVING AVERAGE METHOD IN MANY INDUSTRIES, THE DEMAND IN THE MARKET FLUCTUATION IN A CALENDER YEAR AND THERE ARE RESIONAL VARITIONS WHICH MANY NOT BE REGULAR AND CREAT PROBLUM FOR FORCASTING. THIS METHOD ELEMINATE THE EFFECT OF SEASONALIY AND OTHER IRREGULAR SALES.
IF SEASIONAL EFFECT ARE PRESENT IN THE DEMAND PATTERN OF THE
PRODUCT, A MINIUM OF TWO YEAR OF HISTORY IN NEEDED FROM APPLYING THIS METHOD
II. EXTRAPOLATION METHOD
THIS METHOD USES THE PROJECTION AND TREND TO ARRIVE AT
EXTRAPOLATION OF SALES. IT INVITES GRAPHICAL REPRESANTATION OF SALESFIUURE FOR THE PAST SEVERAL YEAR AND STREATCHING OF THE LINE OR THE CURVE.
THIS METOD USEFULL ONLY WHERE POST PATTERN OF INDIVIDUAL
BEHAVIOUR HAS BEEN STEADY AND ABURPT CHANGES ORDISTRUPTION IN THE MARKETING ENVIRONMENT IS UNLIKELY FIG.1 SHOWS THE EXPLORATION METHOD.
THE LIMITATION OF THIS METHOD IS SIMILEAR TO THE SIMPLE
PROJECTION METHOD.
III. SIMPLE PROJECTION METHOD
THE SIMPLE PROJECTION METHOD IS THE USE OF THE RULE OF THE THUM BY WHICH CURRENT YEAR OR NEXT YEAR’S SALES FORCAST IS ARRIVED AT BY SIMOLE ADDING CERTAIN PERCENTAGE TO THE LAST YEAR SALES. SOME FRIMS USE THE FORMULA
NET YEAR’S SALES = (CURRENNT YEARS SALES) 2
LAST YEAR’S SALES
MONTH OR YEAR (1995-2010)
FIG: PROJECTION FROM BLEAND (FROM PAST SALES FIUERES)
LIMITATION
a. THIS METHOD IS NOT SUITABLE WHERE THE MARKETIN ENVIRONMENT IS
CHANGING AND EVEN THE MARKETING EFFORT THE RISTICTED DUE TO MANY OTHER FACTOR LIKE, NON-AVIABILITY OF RAW MATERIAL POWER STORAGE TRANSPORT PROBLUME ETC . b. THE MAIN LIMITATION IS THAT TIS METHOD ASSUMES THAT POST SALES IS THE ONLY FACTOR INFLUENCEING THE FUTURE SALES, WHICH MAY NOT BE CORRECT ASSESTMENT OF THE CHANGING MARKET CONDITIONS. I. EXPONENTAL SMOOTHING METHOD THIS METHOD IS ANOTHER PROJECT METHOD OF FORCASTING AND USED EXCLUCIVLY. THE METHOD SIMILEAR TO MOVING AVERAGE METHODS. IT REPRESENT THE WEIGHTED SUM OF ALL POST NUMBER IN A TIME SERIES WITH THE MAXIMUM WEIGHT PLACE ON MOST RECENT DATA EXPONENTAL SMOOTING IS A SPECIAL CASE OF THE TECHINIQUE KNOWN AS BOX JENKIS TECHINIQUE, IN WHICH THE TIME SERIES IS FITTED INTO A MATAMATICAL MODEL IN WHICH ASSIGN SIMILEAR ERROR TO HISTORY. THIS IS THE MOST ACCURATE STATICAL TECHINIQUE USED AND FIND FREGUENT USE IN CONSUMER GOOD BOTH DURABLE AND NON DURABLE AND IN SOME INDUSTRIAL GOODS. II. REGRESSION ANALYSIS REGRESSION ANALYSIS IS ANOTHER ANALYTICAL TECHINIQUE OF SALES FORCASTING. THIS TECHINIQUE TRIES TO FUNCTIONALLY RELATED SALES OF THOSE VARIABLE LIKE ECONOMIC SITUATION IN THE MARKET COMPETITIVE FACTOR OR NEW ENTRY OF CONSUMPTION AND PRICING FACTORS III. TIME SERIES ANALYSIS THIS METHOD IS EXTENSIVELY USED IN SALES FORCASTING AND IS ALSO KNOWN AS TREND CYCLE ANALYSIS. TIME SERIES ANALYSIS TIME SERIES ANALYSIS. TIME SERIES ANALYSIS IS GENERALLY USE FOR A PERIOD OF FIVE TO TEN YEAR. IT IS BASED ON BUSINESS CYCLE THEORY AND ASSUMES THE POST SALES TREND WILL CONTINUDE IN FUTURE TOO. IN CASE OF TREND ANALYSIS, THE FORCAST EXAMIN AGGREGATE SALES DATA, SUCH AS ANNUAL SALES FOR A PERIOD OF SEVERAL YEAR TO FIND OUT WETHER THE SALES WHERE MOSTLY STABLE, RISING, OR FALLING [fig. 2-A]. CYCLIC ANALYSIS CONCERN STUDING SALES FIGURE FOR THREE TO FIVE YEAR OR FIND OUT IF THE SIDE FLUCTED IN A CONSISTENT, PERIODIC MANNER. [fig. 2-B]. THE FORCAST UNDERTACK SEASONAL ANALYSIS TO EXAMIN DALY, WEEKLY OR MONTHLY SITE FIGURE TO DETRMINE THE DEGREE OF NATURAL FACTORS SUCH AS, REASION OR FESTAVEL.[fig.2-c]. RANDOM FACTORS ANALYSIS EXAMINS SALES VARITION DUE TO NON – RECURRENT OR RANDOM FACTOR SUCH AS, IMPACT OF DROUGHT, FOLDERS SPRADE OF SEASIONALDISEASE, AND OTHER NATURAL DISASTER. FOR EXAMPLE, WE HAVE SEEN THE IMPACT OF REGIONAL OR WIDESPREAD DROUGHTS ON DEMEAND OF A VERITY OF PRODUCT IN INDIA. [fig. 2-D]. THE ANALYSIS IS BASED ON THE ASSUMPTION THAT THESE ELEMENTS ARE COMBINE IN THE FOLLOWING RELATIONSHIP; SALES = T X S X S X R (TREND X CYCLE X SEASON XRANDOM FACT). TIME SERIES ANALYSIS IS VIEWED AS AN EFFICTIVE METHOD OF FORCASTING FOR PRODUCT THAT HAVE A RESONABLE STABLE DEMAND
Fig. 2. A trend analysis fig. 2.B cycle
analysis
Years weak
Fig. 2-c seasonal analysis fig 2-B random analysis
Fig. 2 . sales variation with time
THE ASSOCIATION BETWEEN THE DEPENDENT VARIABLE AND CASUAL VARIABLE
IS DETERMINED AND MEASURED. AN EQUATION IS FITTED TO EXPLAIN THE FILUCATION IN SALES IN TERM OF CASUAL VARIABLES.