week 2 reading

week 2 reading - Chapter 4 revenue forecasting Revenue...

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Chapter 4 revenue forecasting Revenue forecasting Type 1 error: Overestimating sales type 2 error: Underestimating sales Develop a revenue forecast calculate base from which to estimate revenues determine historical trends establish seasonality include foreseeable market moving events that will affect revenue adjust forecast for anticipated market trends and changes affecting sales projections monitor competitors’ activities and anticipate what they’ll do add your firm’s strategic business plans to the sales forecast adjust pricing and promotions Mistakes: Linear forecasting assuming growth is linear exponential forecasting assuming growth is exponential 20/80 vs 80/20 time forecasting revenue and time spent forecasting expenses 4 times as much time should be spent forecasting revenue to develop marking plan Revenues=price x quantity Marketing plan/marketing mix addresses product positioning, pricing, promotion, and distribution (place ) offer clear support, rationale, justification for pricing used in revenue forecast. quantity should be explained and supported by the marketing mix product positioning explains who the customers are, how many in the target market, why customer will chose product over competitors. promotion explains how business will communicate with customers to motivate them to buy product distribution explains how the business will get product to customers in the most efficient, convenient manner possible industry and market trends: growth or downturn forecast will affect revenue and growth projects for business within industry Market research shows the thought process and behavior of potential customers. competitive analysis generate inventory of all competitors that do business in the market, current and potential estimate market share for each competitor. Can be calculate by estimating sale for each competitor and adding sales to estimate size of market use data gather through market research to identify features customer like and do like like of each competitor’s product and services create a competitive analysis grid. Listing business and customers needs and preferences with most important first Id competitive strategies to be pursed given analysis. Creating scenarios assumptions used to develop marketing and revenue plan are adjusted creating 3 scenarios best case: where all assumptions are valid most likely: adjust 3 to 5 critical assumptions down this is main scenario from which business plan will be derived worse case: all critical assumptions fail, business fails Revenue forecast and cash flow forecast determine whether credit will be extended if credit is extended % in cash % in credit
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week 2 reading - Chapter 4 revenue forecasting Revenue...

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