Sales Budget & Sales TargetForecasting Sales - MashhadBy : Amin Kakhki 2016 – Frozen Food Industry

The Team

Marketing Plan

Sales Force BudgetSales Forecast

Sales Forecasting

Sales forecasting is a difficult area of management. Most managers believe they are good at forecasting. However, forecasts made usually turn out to be wrong! Marketers argue about whether sales forecasting is a science or an art. The short answer is that it is a bit of both.

Forecasting Approaches

Two basic approaches:• Top-down or Break-down

approach• Bottom-up or Build-up

approachSome companies use both approaches to increase their confidence in the forecast

Sales Budget & Target

Sales Budget & Sales Target

Other Factors

Market Opportuniti

esSales

Forecasting

Marketing Data &

Strategy

Market Size & Opportunities• Official Statistics Data : Market size depend on

official statistics like population, rate of buying , number of supermarket and ….

• Market Research : The best way to summarize information about market size and market opportunities is market research , but it is so expensive and time-consuming.

• Pervious Research Data : After a couple of years , there are too many market data , that we can use to define market size and market opportunities. We can use buying pattern for different customer’s level and buying pattern in others sale’s line.

Pervious Research Data • In pervious research , (2014 Mashhad), we know

that the market size is 94,000 Kg per month but there is no data about the number of customer.

• So we know that potential market is least 94,000 Kg per month , market forecast is at least 33,000 kg.

Market Potential

Market ForecastMarket Minimum

Industry marketing expenditure

Mar

ket d

eman

d

Sales Forecasting MethodsQualitative Methods Quantitative Methods

• Executive opinion • Moving averages

• Delphi method • Exponential smoothing

• Salesforce composite • Decomposition

• Survey of buyers’ intentions

• Naïve / Ratio method

• Test marketing • Regression analysis• Econometric analysis

Regression analysis• According to the sales’ pattern with

understanding the effects of seasonal and even months, after reviewing various statistical models and methods, it was found that the regression analysis shows the closest forecast for sales.

Regression Analysis Method

• It is a statistical forecasting method• Process consists of identifying causal relationship

between company sales (dependent variable, y) and independent variable (x), which influences sales

• If one independent variable is used, it is called linear (or simple) regression, using formula; y=a+bx, where ‘a’ is the intercept and ‘b’ is the slope of the trend line

• In practice, company sales are influenced by several independent variables, like price, population, promotional expenditure. The method used is multiple regression analysis

• Advantages: Objective, good accuracy, predicts upturn / downturn, short to medium time, low to medium cost

• Disadvantages: technically complex, large historical data needed, software packages essential

For Khordad (AM)Total Frozen Foods

Sale forecastMinimum Market

28603 Kg

Market Forecast36000 Kg

Market Potential103000 Kg

Total AM(2014) = 94000Total AM(2016) = 94000 + 10% = 103000

Other Factors• Khorasan is one of the largest Province in Iran

with 889058 households . According to scientific papers , at least 4900 supermarket needs to covered.

• Statistics show that only 45 percent of supermarket buying frozen products. The number of supermarkets which buy frozen food is 2,200 stores.