Quantitative sales forecasting

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  • Created by: noe
  • Created on: 18-09-20 09:52
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  • Quantitative sales forecasting
    • Likely to be more reliable when...
      • Forecast is for a short period of time in the future
      • Revised frequently to take into account new data
      • Market is slow-changing
      • Market research data is available
      • Those preparing the forecast have a good understandingof how to use the data
      • Those preparing forecast have a good 'feel' for the market
    • Producing a forecast range can increase accuracy
      • Optimistic forecast
        • Low probability of occurring but gives an idea of best- and worst-case scenarios
      • Pessimistic forecast
        • Low probability of occurring but gives an idea of best- and worst-case scenarios
      • Central forecast (highest probability of occurring)
      • Supplying these forecasts to other departments gives them an idea of the possible variations they might have to face
    • Causal modelling: use to find a link between one set of data and another
      • E.g. the amount spent on advertising and sales level
      • Data plotted onto a scattergraph and line of best fit drawn through the data to show a either a positive or negative relationship
      • Correlation (relationship between two variables)

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