1 / 24

Sales Management 8

Sales Management 8. Estimating Demand. Market Potential. Sales. Industry Forecast. (Industry Forecast ≤ Market Potential). (Company Forecast ≤ Company Potential). Company Potential. Company Forecast. 0. Time. Key Terms. Market Potential: All possible sales

darci
Download Presentation

Sales Management 8

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Sales Management 8 Estimating Demand

  2. Market Potential Sales Industry Forecast (Industry Forecast ≤ Market Potential) (Company Forecast ≤ Company Potential) Company Potential Company Forecast 0 Time

  3. Key Terms • Market Potential: All possible sales • Industry Forecast: Likely sales, all companies • Company Potential: All possible sales for one company • Company Sales Forecast: Likely company sales NB: All figures are expressed for a period of TIME.

  4. So how do you estimate demand? • Determine WHO will use the product. • Which segment(s)?; Size? • Determine their RATE of use. • New/Replacement; Frequency. • WHO buys product? • Purchasing agent, parent, lover, uncle • WHAT is their motivation to purchase? • Life event, new business, new market, fun

  5. Why Forecast Sales? • Allocate resources • Control operations • Project Cash Flow (Important!) • Capital/operating budgets • Production schedules & Inventory control • Hiring; collective bargaining • Planning marketing and sales plans

  6. Methods of Forecasting • Subjective • Users’ Expectations • Sales Force Composite • Jury of Executive Opinion • Delphi Technique

  7. Users’ Expectations • Also called Buyers’ Intentions method • Focus Groups • Surveys • Intention ≠ Behavior, but does correlate

  8. Sales Force Composite • Salespeople are boundary-spanners • Close to customers, competitors • Fingers on the pulse of the market • Survey sales force, and add up estimates • Good starting point; need adjustment

  9. Jury of Executive Opinion • Top/key executives, perhaps outside consultants, give best estimate • Not boundary spanners, but see “Big Picture” • May need discussion to reach an estimate that everyone can agree on

  10. Group Think

  11. Delphi Technique • Similar to Executive Opinion • Iterative/Secret Process • Convergence

  12. Methods of Forecasting • Objective • Market Test • Time Series Analysis • Moving Averages • Exponential Smoothing • Decomposition • Statistical Demand Analysis

  13. Test Market • Pick “representative” city • Full marketing effort • Extrapolate results to rest of nation • Expensive • Takes time • Tip your hand • Competitors can skew results

  14. Time Series Analysis • Use historical (not hysterical) data to predict future • Like driving by looking in the rear-view mirror • Estimate starts in “ballpark” (not the franks)

  15. Moving Averages • Average last n (=2,4, whatever) years sales to predict the coming year 2005: 5,000 units 2006: 8,000 units 2007: 8,000 units 2008: 7,000 units estimated

  16. Decomposition • Apply to monthly or quarterly data • Account for: • Trends • Cycles • Seasons • Random occurrences

  17. Statistical Demand Analysis • Use regression or other techniques to determine relationship between sales and predictor factors. • Need good data and analytical skills. • Example: • Home heating oil demand = Function of temperature, sun, last fill, tank size, & history.

  18. What do companies use? • They tend to rely more heavily on qualitative than quantitative. • Especially sales force composite and jury of executive opinion. • Easier, quicker, perhaps accurate enough

  19. Sales Territories • Design territories • Need a market index to compare • Industrial Goods • Standard Industrial Classification • North American Industrial Classification System • Consumer goods • Buying Power Index = (5I + 2P + 3R)/10 • % disposable personal Income • % US Population • % total Retail sales

More Related