They also used for short term planning of the

Info icon This preview shows pages 62–64. Sign up to view the full content.

View Full Document Right Arrow Icon
programmes like personal selling, advertising, warehousing arrangements and so on. They also used for short-term planning of the activities in the functional areas that are outside marketing like production, finance and materials. The long range forecast at the time of starting facilitate investment decisions at the time of starting a new industry or while attempting an expansion or diversification. Since industrial investment is often irrevocable and the pay-off period extends over a long term demand forecasting for a longer-term, say ten years will be essential for investment decisions. The margin of error may be high in such long-term forecasts. Yet, they would be sufficiency reliable for planning purposes. Sometimes, one comes across a still longer-term forecast, say for 15 or 25 years. Such forecasts are normally used for the purpose of perspective planning. Economics subscribing to planned economic development often generate perspective planning targets in the different sectors of the national economy. Perspective planning of this kind serves as a guide to the planning and implementation process over a really long ranging period. SALES FORECASTING IS A DIFFICULT TASK In any business, sales forecasting invariably turns out to be a difficult exercise. There are two vital reasons for this. In the first place, forecasting means predicting the future. And as Peter F.Drucker said, we can be certain of only three things about the future: i. it cannot be known with certainty. ii. it will be different from what it is now. iii. it will be different from what we expect it to be. Secondly, each business has certain peculiarities. As such, forecasting of demand and sales in any business bristles with certain peculiar complexties. One has to master these complexties in any attempt at sales forecasting. Annamalai University
Image of page 62

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
61 CRITERIA IN SALES FORECASTING The following are the criteria frequently used : Market potential (or industry potential) Company potential (or sales potential) Market demand (or industry demand) Company demand (or sales possibilities) Market forecast (or industry forecast) Company forecast (or sales forecast) ‘Market potential’ is nothing but a quantitat ive estimate of the total possible sales by all the firms selling the product in a given market. It gives an indication of the maximum demand or the ultimate potential for that product assuming that the ideal marketing effort is made. ‘Company potential’ refers to a part of the market potential, what an individual firm can sell at the maximum in a given market, again under ideal condition and on the assumption that the ideal marketing effort is made. The terms ‘Market demand’ and ‘Company demand’, refer t o those portions of ‘Marketing potential’ and ‘Company potential’ that are achievable under existing conditions. ‘Market forecast’ and ‘Company forecast’ are still narrower -they refer to what the industry and the firm respectively are likely to sell in actual practice during the period of the forecast.
Image of page 63
Image of page 64
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern