As point out this method cannot be adopted in

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As point out, this method cannot be adopted in consumer goods marketing as the customers are large in number. Secondly, customer expectations cannot be predicted accurately. 5. Market Share Method : Some firms use a simple method of sales forecast in which the desired / planned market share of the firm if the key factor. They world out the industry forecast apply their market share factor and deduce the company’s sales forecast. The market share factor is developed based on past trend, company’s competitive position, brand preference etc. Such conversion of industry forecast into company sales forecast requires considerable expertise. By a detailed marketing audit, the firm must correctly appraise its market standing, brand image, market share and strengths and weaknesses as compared with the competitor in the industry. It must also correctly asses through reliable marketing intelligence, its competitor’s plans, policies and activities. Only then, the forecast arrived at by this method will have a good degree of reliability. Retail audit would also be of considerable help in employing the market share method; it would help assess the industry position as well as the individual firm’s market shares. 6. Simple Projection Method : Among the projection methods, the simplest is the one that uses the ‘rule of the thumb’ by which current years’ forecast is arrived at by simply adding a certain percentage to last year’ sales. Some firms use for formula shown below: Next year’s sales = sales s year' Last sales) s year' (This 2 This formula will provide a reasonably reliable estimate only if the sales are stable and show an increasing trend. Some other firms go by the growth rates Annamalai University
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63 adopted by industry leaders. In certain cases, the rate of growth of the industry as a whole is adopted for the projection. 7. Extrapolation Method : Some firms rely on the extrapolation method. Extrapolation is also a projection / trend method. It involves the plotting of the sales figures for the past several years and stretching of the line, or the curve as the case may be. The mechanical extrapolation will give the sales forecast for the coming years. Exploration basically assumes that the variables will follow the previously established pattern. Accordingly, this method will be effective where the [pattern of past movement has been relatively steady and abrupt disruptions are unlikely in the future. IN other words, the assumption is that the future will mirror the past. 8. Moving Averages Method : This method enables us to eliminate the effects of seasonality and other irregular trends in sales. Each point of a moving average of time series is the arithmetical or weighted average of a number of preceding consecutive points of the series. If seasonal effects are present in the demand pattern of the product, a minimum of two years sales history is needed for applying this method.
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