According to henry fayol the act of for ecasting is

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avoid frantic discharge and hiring policies. According to Henry Fayol, “The act of for ecasting is of great benefit to all who take part in the process, and is the best means of ensuring adaptability to changing circumstances. The collaboration of all concerned lead to a unified front, an understanding of the reasons for decisions, and a br oadened outlook”. The specific contributions of forecasting to the field of marketing management may be summed as follows: To decide whether to enter a new market or not. To determine how much production capacity to be built up. To help in the product mix decisions (to eliminate or to add a new product). To prepare standards against which to measure performance. To prepare annual budgets based on estimated sales revenue. To assess the effects of a proposed marketing programme. Sales forecast is the cost of keystone of marketing management. On the basis of the reliable sale forecast, we can have (1) the required number of the salesmen to achieve our sales objective, (2) allocation of sales quota for each salesman, (3) determination of sales compensation plan (4) determination of sales territories, (5) advertising and sales promotion programme, (6) Scheme of distribution, (7) Fixing of sales price, (8) production plan, (9) regulating inventories and purchasing, (10) Estimating standard costs, (11) Budgeting and controlling expenses, and (12) planning cash requirements. In fact entire marketing mix, viz., product, price, promotion and physical distribution revolves round the sales forecasts. Sales forecasting acts as the basis not only of production planning and marketing planning but also of financial planning and personal planning. The master plan or budget of the company as the functional or departmental plan and budgets are ultimately based on sales forecasts. Thus a comprehensive and integrated business planning (strategic as well as short term) is based on the foundation of sales planning. Sales forecasting is a device by means of which management may integrate its objectives, its operating programmes, and its targets with potential market Annamalai University
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60 opportunity. This is done by translating the sales forecast into specific profit and sales volume goals to be realized in the given period. The sale forecast thus becomes a basis for marketing programmes, purchasing plans, financial, budgets, personnel needs, production schedules, plant and equipment needs, expansion programme and many other aspects of management programming. PERIOD OF SALES FORECASTS As far as time frame is concerned, basically, there are three types of sales forecasts : the short range forecasts the long range forecasts perspective planning forecasts The short range forecasts help in short range business planning. Such forecast are usually made for a period of one year and reviewed monthly, quarterly or half yearly. Revisions are made in the right of experience and changing conditions. The short range forecsts are used for planning the various sales / marketing programmes like personal selling, advertising, warehousing arrangements and so on.
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