By forecasting locally more variables can be

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estimate sales by region first, and then roll that information up into a national sales forecast. By forecasting locally, more variables can be considered, and with more variables comes more information, which sh ould help the accuracy of the company’s overall sales forecast. Similarly, JCPenney may estimate sales by market segment, such as women over age fifty. Again, forecasting in a smaller segment or business unit can then enable the company to compare such forecasts to forecasts by product line and gain greater accuracy overall. Use Scenario-Based Forecasts One forecast is not enough. Consider what will happen if conditions change. For example, how might your forecast change if your competitors react strongly t o your strategy? How might it change if they don’t react at all? Or if the government changes a policy that makes your product tax free? All of these factors will influence sales, so the smart executive considers multiple scenarios. While the executive may not expect the government to make something tax free, scenarios can be created that consider favorable government regulation, stable regulation, and negative regulation, just as one can consider light competitive reaction, moderate reaction, or strong reaction. Track Actual Results and Adjust As time goes on, forecasts that have been made should be adjusted to reflect reality. For example, Katie Scallan-Sarantakes may have to do an annual forecast for Scion sales, but as each month goes by, she has hard sales data with which to adjust future forecasts. Further, she knows how strongly competition has reacted and can adjust her estimates accordingly. So, even though she may have an annual forecast, the forecast changes regularly based on how well the company is doing. KEY TAKEAWAY A forecast is an educated guess, or estimate, of sales in the future. Accuracy is important because so many other decisions a firm must make depend on the forecasts. When a company forecasts sales, it has to consider
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Saylor URL: Saylor.org 535 market potential and sales potential. Many methods of forecasting exist, including expert opinion, channel and customer surveys, sales force composites, time series data, and test markets. Better forecasts can be obtained by using multiple methods, forecasting for various scenarios, and tracking actual data (including sales) and adjusting future forecasts accordingly. REVIEW QUESTIONS 1. Which forecasting method would be most accurate for forecasting sales of hair-care products in the next year? How would your answer change if you were forecasting for the next month? For home appliances? 2. What is the role of expert opinion in all forecasts? 3. How can forecasting accuracy be improved? 16.4 Ongoing Marketing Planning and Evaluation LEARNING OBJECTIVES 1. Apply marketing planning processes to ongoing business settings.
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  • Winter '12
  • anamika
  • Marketing, Saylor URL

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