INTRODUCTION

FUTURE IS ALWAYS UNCERTAIAN. IT WOULD BE NO DIFFERENCE FROM WHAT

IT IS NAD DIFFERENT FROM WHAT ONE EXPECT TO BE. THEREFOR, THE
MANAGER NEED TO FORCAST THE LIKELY FUTURE. NOW, BEFORE WE
ADVANCE TO SALES FORCASTING WE MUST HAVE THE IDEA OF FORCASTING.

FORCASTING IS THE EVERY BASIS OF PLANNING. IT IS ESSINTIAL A

TECHINIQUE OF ANTICEPATION. IT REFERS TO A SYSTAMATIC ANALYSIS OF
POST AND PRESENT CERCUMSTANCES WITH THE AIM OF DRAWING
CONCLUSION ABOUT THE FUTURE COURCE OF EVENT.

ACCORDING TO ALLEN L.A

‘FORCASTING IS A SYSTAMATIC ATEMPT TO PROB THE FUTURE BY

INFLUENCE FROMKNOWN FACTS’.

ACCORDING TO MC FARLAND

‘FORCAST THE PREDECTION OR ESTIMATION OF THE CHANGE IF ANY IN

CHARACTESTIC ECONOMIC PHENOMINA WHICH MAY AFFECT THE PLAN’.

MEANING FO SALES FORCAST

BUSINESS BY NATURE HAS AN ELEMENT OF UNCERTAINLY WHICH GIVE RISK

TO RISK. THIS RISK CANNOT BE ALTOGATHER ELIMINATED BUT THROUGH
PLANNING AND BUDGETING IT CAN BE REDUCE TO MINIMUM LEVEL. SALES
FORCASTING HELPS IN THIS DIRECTION AS IT PLAY AN IMPORTANT ROLE IN
FORCASTING METHODS.

TWO TYPE OF FORCASTING METHOD ARE USED TO PREPARE THE

SALES FORCAST:-

A. QUALITATIVE OR JUDJEMENTTAL METHODS.

B. ANALYTICAL AND STATICAL METHODS.

A. QUALITATIVE OR JUDJEMENTAL METHODS

UQALITATIVE OR JUDJEMENTAL METHODS CONSIDERED FACTORS RELATED
EDPERTISE AND HUMAN JUDJEMENT. THESE METHOD HAVE THE ADVANTAGE
OF ADJUSTING TO SUDDEN SHIFT IN ENVIRONMENT CIRCUMSTSNCES.

THE VARIOUS QUALITATIVE AND JUDJEMENTAL METHODS ARE USE :

I. COMPANY’S SALES FORCE OPTION.

II. EXPERT OPTION.
III. SURVEY’S OF BUYER’S OPTIONS.
IV. MARKETS TEST RESPONSE METHOD.
V. DELPHI TECHINIQUE TECHINIQUE.
NOW, WE SHALL ELABOURATE EACH OF THEM:

I. COMPANY’S SALES FORCE OPTION:-

THIS IS A BUILT UP METHOD OF PREPARING A SALES FORCAST THE
ASSUMPTION IN USING THIS METHOD IS THAT SELES PEOPLE ARE THE
COMPANY’S AMBASDOR IN CLOSE CONTACT WITH CUSTOM AND
PREVELLING MARKET CONDITION NAD BEST QULIFIED TO ESTIMATE
FUTURE SALES IN THERE INDIVIDUAL TERRITORIES.
LIMITATION
THE MAJOUR LIMTATION IN THIS METHODS ARE:
a. POOR JUDJEMENT OF SALES PERSIONS ABOUT FUTURE SALES BECAUSE
OF THEIR EMOTIONAL INVOLEMENTS..
b. SALES FORCE MAY NOT BE AWARE OF ECONOMIC
DEVELOPMENT’SGROWTH PLANS, ECONOMIC STAGNATION AND
POLICIES.
c. SALES FORCE MAY NOT HAVE TIME OR SERIOUS COMCERN TO APPER
THEIR MIND TO PLAN, COLLECT AND ASSTIMATE DATA FOR
ESTIMATION FOR FORCASTING.
I. EXPERT OPTION
THIS IS PERHAPS THE OLDEST METHOD TO PREPARE A SALES
FORCAST, THIS METHOD UTILISES THE EXPERT OPTION OF PEOPLE
WHO ARE DIRECTLY ASSOCICATE WITH THE COMPANY OR THE
INDUSTRY’S PRODUCT AND SERVICES.
THE EXPERT OPTION METHOD MORE RELIABLE AND CONFIDENT LEVEL
OF ACCURACY IS MORE THAN OTHER METHODS. THE FORCAST CAN BE
DONE VERY QUACKLY AND ARE NOT VERY EXPANCIV. THIS METHOD IS
FREQUENTLY USE FOR NEW PRODUCT WHERE BASIC DATA OR POST
DATA IS NOT AVILABLE.
LIMITATION
a. THE FORCAST IS RELIABLE ONLY TO THE EXTANT OF CORRECTNESS OF
THE JUDJEMENT OF COMMITY MEMBER AND ALSO THE EXTANT OF
HAVING SUFFICENT UPDATE MARKET KNOLEDGE OR CURRENT
INFORMATION ON WHICH TO BASE THEIR FORCAST.
b. ALSO’ THE EXPERTS MAY BE TOO BUYER TO GIVE THEIR OPTION AND
DATA IN A REALISTIC MANNER.
I. SURVEY OF BUYER INTENTIONS
THE BUYER IN THE MARKET CAN BE IMPORTANT SOURCES OF
INFORMATION ABOUT THEIR RESPOUNCE TO PRODUCTS IN THE
MARKET AND ALSO THERE PURCHASE INTENTION IN IMMIDEATE
FUTURE AND FOR THE NEXT FEW YEAR. THIS METHOD USE FOR
DETERMINING AND MEASURING FORCAST FOR PURCHASE OF
AUTOMOBILE MOBILE PHONE AND NEW APPERTMENTS, CREDIT CARD
AND OTHER CONSUMER HOSEHOLD PRODUCTS.
LIMITATION
a. CONSUMER MAY NOT GIVE THEIR FRANK OPTION AND MAY NOT REVEAL
THEIR INTENTION SO CELERALY.
b. IT IS NOT POSSIBLE TO CONTACT EVEN A SUSTINABLE PORTION OF
TOTAL BUYERS IN THE MARKET.
I. MARKET TEST RESPONSE METHOD
THIS METHOD INVOLVES MAKING THE PRODUCT AVAILABLE TO
POTENTIAL CUSTOMER IN ONE OR MOVE TEST MARKETS TO MESURE
THEIR RESPONSE TO PRICE, PROMOTION AND DISTRIBUTION.
THIS IS A GOOD METHOD IS IS THAT IT IS EXPANCIVE AND TIME TAKING
AND MAY NOT REFLECT THE THE TOTAL MARKET
II. THE DELPHI TECHINIQUE
THIS TECHINIQUE CANVAS OPTION FROM EXPERINCED EXECUTIVE
MEMBER OF THE ORGANISATION BY STRUCTERED RESURCH METHOD
MAKING USE OF A QUESTION MARK. THE EXCUTIVE DO NOT MEET THE
COMMETY AND THEREFOR THE RESPODENT BY THE GROUP DYNIMICSOF
THE COMMITTEE’S SITUATION.
THE APPORACH CAN BE VARIED IN THAT PERSION INTERVIEW MAY BE
CONDUCTED WITH EACH RESPONDENT AT THE FEED BACK STAGE
RATHER THAN THE IMPERSIONAL DISTRIBUTION OF FEED BACK NOTE
AND FURTHER QUESTIONARIES MAY PROCEED FROM THE MICRO STAGE
OF FORCASTING.
THIS METHOD HAS BEEN FREQUIENTLY USED AND WHILE SOME
OBSERVES FEEL THAT DELPHI IS BETTER SUITED TO ESTIMATED OF
GENERAL TREND IN MARKET AND TECHNOLOGY RATHER THAN TO
DECIDED ESTIMATES OF INDIVIDUAL PRODUCT SALES. THIS METHOD
HAS THE ADVANTAGES OF ELIMINATING GROUP PRESSURE OF A
COMMITTEE DISCUSSION.
B.ANALYTICAL AND STATISTICAL METHOD
BUSINESS FIRMS USE A VERITY OF ANALYTICAL AND STATICALS METHOD
FOR FORCASTING THE SALES. HOWEVER, IT MUST BE POINTED OUT
THAT USING STATICAL METHOD IS NOT SIMPLE AND ONLY EXPERINCED
HAND CAN USE METHOD PROPERLY. THE ANALYTICAL AND STATICAL
METHODS USE THE:
I. MOVING AVERAGE METHOD.
II. EXTRAPOLATION METHOD.
III. SIMPLE PROJECTION METHOD.
IV. EXPONENTAL SMOOTHING METHOD.
V. REGRESSION METHOD.
VI. TIME SERIES ANALYSIS.
VII. ECONOMATRIC MODELS.
I. MOVING AVERAGE METHOD
IN MANY INDUSTRIES, THE DEMAND IN THE MARKET FLUCTUATION IN A
CALENDER YEAR AND THERE ARE RESIONAL VARITIONS WHICH
 MANY NOT BE REGULAR AND CREAT PROBLUM FOR FORCASTING. THIS
METHOD ELEMINATE THE EFFECT OF SEASONALIY AND OTHER
IRREGULAR SALES.

IF SEASIONAL EFFECT ARE PRESENT IN THE DEMAND PATTERN OF THE

PRODUCT, A MINIUM OF TWO YEAR OF HISTORY IN NEEDED FROM
APPLYING THIS METHOD

II. EXTRAPOLATION METHOD

THIS METHOD USES THE PROJECTION AND TREND TO ARRIVE AT

EXTRAPOLATION OF SALES. IT INVITES GRAPHICAL REPRESANTATION OF
SALESFIUURE FOR THE PAST SEVERAL YEAR AND STREATCHING OF THE
LINE OR THE CURVE.

THIS METOD USEFULL ONLY WHERE POST PATTERN OF INDIVIDUAL

BEHAVIOUR HAS BEEN STEADY AND ABURPT CHANGES ORDISTRUPTION
IN THE MARKETING ENVIRONMENT IS UNLIKELY FIG.1 SHOWS THE
EXPLORATION METHOD.

THE LIMITATION OF THIS METHOD IS SIMILEAR TO THE SIMPLE

PROJECTION METHOD.

III. SIMPLE PROJECTION METHOD

THE SIMPLE PROJECTION METHOD IS THE USE OF THE RULE OF THE
THUM BY WHICH CURRENT YEAR OR NEXT YEAR’S SALES FORCAST IS
ARRIVED AT BY SIMOLE ADDING CERTAIN PERCENTAGE TO THE LAST
YEAR SALES.
SOME FRIMS USE THE FORMULA

NET YEAR’S SALES = (CURRENNT YEARS SALES) 2

LAST YEAR’S SALES

MONTH OR YEAR (1995-2010)

FIG: PROJECTION FROM BLEAND (FROM PAST SALES FIUERES)

LIMITATION

a. THIS METHOD IS NOT SUITABLE WHERE THE MARKETIN ENVIRONMENT IS

CHANGING AND EVEN THE MARKETING EFFORT THE RISTICTED DUE TO
MANY OTHER FACTOR LIKE, NON-AVIABILITY OF RAW MATERIAL POWER
STORAGE TRANSPORT PROBLUME ETC .
b. THE MAIN LIMITATION IS THAT TIS METHOD ASSUMES THAT POST SALES
IS THE ONLY FACTOR INFLUENCEING THE FUTURE SALES, WHICH MAY
 NOT BE CORRECT ASSESTMENT OF THE CHANGING MARKET
CONDITIONS.
I. EXPONENTAL SMOOTHING METHOD
THIS METHOD IS ANOTHER PROJECT METHOD OF FORCASTING AND
USED EXCLUCIVLY. THE METHOD SIMILEAR TO MOVING AVERAGE
METHODS. IT REPRESENT THE WEIGHTED SUM OF ALL POST NUMBER IN
A TIME SERIES WITH THE MAXIMUM WEIGHT PLACE ON MOST RECENT
DATA
EXPONENTAL SMOOTING IS A SPECIAL CASE OF THE TECHINIQUE
KNOWN AS BOX JENKIS TECHINIQUE, IN WHICH THE TIME SERIES IS
FITTED INTO A MATAMATICAL MODEL IN WHICH ASSIGN SIMILEAR
ERROR TO HISTORY.
THIS IS THE MOST ACCURATE STATICAL TECHINIQUE USED AND FIND
FREGUENT USE IN CONSUMER GOOD BOTH DURABLE AND NON
DURABLE AND IN SOME INDUSTRIAL GOODS.
II. REGRESSION ANALYSIS
REGRESSION ANALYSIS IS ANOTHER ANALYTICAL TECHINIQUE OF SALES
FORCASTING. THIS TECHINIQUE TRIES TO FUNCTIONALLY RELATED
SALES OF THOSE VARIABLE LIKE ECONOMIC SITUATION IN THE MARKET
COMPETITIVE FACTOR OR NEW ENTRY OF CONSUMPTION AND PRICING
FACTORS
III. TIME SERIES ANALYSIS
THIS METHOD IS EXTENSIVELY USED IN SALES FORCASTING AND IS
ALSO KNOWN AS TREND CYCLE ANALYSIS. TIME SERIES ANALYSIS
TIME SERIES ANALYSIS. TIME SERIES ANALYSIS IS GENERALLY USE FOR
A PERIOD OF FIVE TO TEN YEAR. IT IS BASED ON BUSINESS CYCLE
THEORY AND ASSUMES THE POST SALES TREND WILL CONTINUDE IN
FUTURE TOO.
IN CASE OF TREND ANALYSIS, THE FORCAST EXAMIN AGGREGATE
SALES DATA, SUCH AS ANNUAL SALES FOR A PERIOD OF SEVERAL
YEAR TO FIND OUT WETHER THE SALES WHERE MOSTLY STABLE,
RISING, OR FALLING [fig. 2-A].
CYCLIC ANALYSIS CONCERN STUDING SALES FIGURE FOR THREE TO
FIVE YEAR OR FIND OUT IF THE SIDE FLUCTED IN A CONSISTENT,
PERIODIC MANNER. [fig. 2-B].
THE FORCAST UNDERTACK SEASONAL ANALYSIS TO EXAMIN DALY,
WEEKLY OR MONTHLY SITE FIGURE TO DETRMINE THE DEGREE OF
NATURAL FACTORS SUCH AS, REASION OR FESTAVEL.[fig.2-c].
RANDOM FACTORS ANALYSIS EXAMINS SALES VARITION DUE TO NON
– RECURRENT OR RANDOM FACTOR SUCH AS, IMPACT OF DROUGHT,
FOLDERS SPRADE OF SEASIONALDISEASE, AND OTHER NATURAL
DISASTER. FOR EXAMPLE, WE HAVE SEEN THE IMPACT OF REGIONAL
OR WIDESPREAD DROUGHTS ON DEMEAND OF A VERITY OF PRODUCT
IN INDIA. [fig. 2-D].
 THE ANALYSIS IS BASED ON THE ASSUMPTION THAT THESE ELEMENTS
ARE COMBINE IN THE FOLLOWING RELATIONSHIP;
SALES = T X S X S X R (TREND X CYCLE X SEASON XRANDOM
FACT).
TIME SERIES ANALYSIS IS VIEWED AS AN EFFICTIVE METHOD OF
FORCASTING FOR PRODUCT THAT HAVE A RESONABLE STABLE
DEMAND

Fig. 2. A trend analysis fig. 2.B cycle

analysis

Years weak

Fig. 2-c seasonal analysis fig 2-B random analysis

Fig. 2 . sales variation with time

THE ASSOCIATION BETWEEN THE DEPENDENT VARIABLE AND CASUAL VARIABLE

IS DETERMINED AND MEASURED. AN EQUATION IS FITTED TO EXPLAIN THE
FILUCATION IN SALES IN TERM OF CASUAL VARIABLES.

THE RELATIONSHIP CAN BE EXPRESS AS :

Y = A+B1X+B2X2+-------+BnXn

Y IS THE DEPENDENT VARIABLE.

X IS THE INDEPENDENT OR CAUAL VARIABLE.