Sales Forecast

&
Sales Quota

Session VII
8th September 2008

1
 Understanding of 
 Market Potential
 Sales Potential

 Sales Forecast

 Sales Budget

 Sales Quota

2
 Understanding of 
Market Potential Highest possible expected


Industry sales for a specified
market & given time period
 Sales Potential  Share of a market potential that
an Organization wish to achieve
over a given time frame
 Sales Forecast  Sales estimate that an
organization expects to meet over
a given period
 Sales Budget  It is the quantity sales that the
management expects to raise
from the area assigned
 Sales Quota
 Sales goal assigned to specific
marketing unit for a given period

3
 Why fix Targets ?
 Planning & Control
 Contractual Obligations

 Quantification of Salesman Job

 To workout sound Compensation

system
 Cost effectiveness

 Comparative study of territories

 To raise motivational level

4
 How do one fix targets ?
 Past sales performance records
 Market share participation base

 Sales forecast by territory salesman

 Production downwards

5
 Comprehensive target fixation exercise
 Objectives of the organisation
 Constraints of capacity production

 Current participation level / Market

share
 Financial constraints & / or

advantages
 Opinion of

• Salesman
• Sales Executive
• Area / Regional Managers
6
 Prerequisites of Sales targets
 Objective mindset
 Target must be Accurate, Fair & within

reach
 Participative Targets get better

acceptance
 Establish midway review and self

corrective system
 Targets must be specific and measurable

7
 Prerequisites of Sales targets
 Target system established must be
continuously appraised
 Managerial control

 Target must be informed well in

advance

8
 Positives of sales targets
 Optimum utilization of resources
 Establishment of Unbiased Appraisal

System
 Comparisons, Contests &

Competitive spirit is promoted

 Achievement of additional sales &

profits

9
Negative features of Sales targets
 Leads to bad debits
 Lead to unwanted Mental and

Psychological pressures
 May result in unwanted inventories

 Point of discord between the sales

manager and the field salesman

 Too many resignations  Attritions

 Investment levels will go up

10
Managing Forecasting function
 Who should be responsible for
forecasting?
 Which forecast method should be

used ?
 What should be the length of the

forecast?
 How should the forecast be

evaluated ?

11
 Who should be responsible for
forecasting
 Pinpoint responsibility period-wise

 Understand the limitation of the

forecast

 Involvement of the product

management group

12
 Which forecast method should be
used
 Keeping in mind the
• Cost factor
• Time factor
• Accuracy factor

13
 What should be the length of the
forecast
 Requirement at operating level
• Weekly
• Monthly
• Quarterly
• Yearly
 Requirement at the CEO level
• Five years projection also

14
 How should the forecast be
evaluated
 Evaluation of actual results
• Weekly
• Monthly
• Quarterly
 Periodicity of evaluation and distance
from the year end targets

15