Types of Sales Forecasting

Updated on May 29, 2020
santhov profile image

Administrative professional working in the areas of administration, finance, and marketing.

Learning the types of sales forecasting can make you a better employee and leader.
Learning the types of sales forecasting can make you a better employee and leader. | Source

Importance of Sales Forecasting

  1. Supply and demand for the products can easily be adjusted, by overcoming temporary demand, in the light of the anticipated estimate and regular supply is facilitated.
  2. A good inventory control is advantageously benefited by avoiding the weakness of understocking and overstocking.
  3. Allocation and reallocation of sales territories are facilitated.
  4. It is forward planning as all other requirements of raw materials, labour, plant layout, financial needs, warehousing, transport facility etc., depend in accordance with sales volume expected in advance.
  5. Sales opportunities are searched out on the basis of the forecast, and thus the discovery of selling success is made.
  6. It is a gear, by which all other activities are controlled as a basis of forecasting.
  7. Advertisement programmes are beneficially adjusted with full advantage to the firm.
  8. It is an indicator to the department of finance as to how much and when finance is needed, and it helps to overcome difficult situations.
  9. It is a measuring rod by which the efficiency of the sales personnel or the sales department, as a whole, can be measured.

Factors Influencing a Sales Forecasting

A sales manager should consider all the factors affecting the sales while predicting their firm's sales in the market. An accurate sales forecast can be made if the following factors are considered carefully:

1. General Economic Condition

It is essential to consider all economic conditions relating to the firm and the consumers. The forecaster must see the general economic trend-inflation or deflation, which affect the business favourably or adversely. A thorough knowledge of the economic, political and the general trend of the business facilitates to build a forecast more accurately.

2. Consumers

Products like wearing apparel, luxurious goods, furniture, vehicles, the size of population by its composition customers by age, sex, type, economic condition etc., have an Important role to determine the sales volume.

3. Industrial Behavior

Markets are full of similar products manufactured by different firms, which compete among themselves to increase the sales. As such, the pricing policy, design, advanced technological improvements, promotional activities etc., of similar industries must be carefully observed. A new firm may come up with products to the markets and naturally affect the market share of the existing firms.

4. Changes Within the Firm

Future sales are greatly affected by the changes in pricing, advertising policy. quality of products etc. A careful study in relation to the changes in the sales volume may be studied carefully. Sales can be increased by a price cut, enhancing advertising policies, increased sales promotions, concessions to customers etc.

5. Periods

The required information must be collected on the basis of period short run, medium run or long run forecasts.

Types of Sales Forecasting

Approaches to forecasting techniques and procedures vary from firm to firm. There are many methods. A firm may manufacture the products or distribute the products. The following are the various methods of sales forecasting.

Methods of Sales Forecasting

  1. Jury of Executive Opinion.
  2. Sales Force Opinion.
  3. Test Marketing Result.
  4. Consumer's Buying Plan.
  5. Market Factor Analysis.
  6. Expert Opinion.
  7. Econometric Model Building.
  8. Past Sales (Historical Method).
  9. Other Factors.

1. Jury of Executive Opinion

This method of sales forecasting is the oldest. One, or more of the executives, who are experienced and have good knowledge of the market factors make out the expected sales. The executives are responsible while forecasting sales figures through estimates and experiences. All the factors-internal and external are taken into account.

2. Salesforce Opinion

Under this method, salesmen or intermediaries are required to make out an estimate sales in their respective territories for a given period. Salesmen are in close touch with the consumers and possess good knowledge about the future demand trend.

3. Test Marketing Result

Under the market test method, products are introduced in a limited, geographical area and the result is studied. Taking this result as a base, sales forecast is made. This test is conducted as a sample or pre-test basis in order to understand the market response.

4. Consumer's Buying Plan

Consumers, as a source of information, are approached to know their likely purchases during the period under a given set of conditions.This method is suitable when there are few customers This type of forecasting is generally adopted for industrial goods. It is suitable for industries, which produce costly goods to a limited number of buyers - wholesalers, retailers, potential consumers, etc. .A survey is conducted on face to face basis or survey method. It is because changes are constant while buyer behaviour and buying decisions change frequently.

5. Market Factor Analysis

A company's sales may depend on the behaviour of certain market factors. The principal factors which affect the sales may be determined. By studying the behaviours of the factors, forecasting should be made. Correlation is the statistical analysis which analyses, the degree of extent to which two variables fluctuate with reference to each other.The word 'relationship' is of importance and indicates that there is some connection between the variable under observation. In the same way, regression analysis, is a statistical device, which helps us to estimate or predict the unknown value of one variable from the unknown values of another variable.

6. Expert Opinion

Many types of consultancy agencies have entered into the field of sales. The consultancy agency has specialised experts in the respective field. This includes dealers, trade associations, etc. They may conduct market research and possess readymade statistical data. Firms may make use of the opinions of such experts. These opinions may be carefully analysed by the company and a sound forecasting is made.

This article is accurate and true to the best of the author’s knowledge. Content is for informational or entertainment purposes only and does not substitute for personal counsel or professional advice in business, financial, legal, or technical matters.


    0 of 8192 characters used
    Post Comment
    • profile image

      Tapash Ghosh 

      20 months ago

      This kind of blogging makes learning easy

    • jupiter justice profile image

      Asher Socrates 

      4 years ago from Los Angeles, CA

      Great way to layout this article. Very informative and valuable sales and goal analytics and opinions. Thanks for the the insight and quality material you are providing. Keep up the great work! I will be bookmarking and following you.

    • datapole profile image


      7 years ago

      Very Informative



    This website uses cookies

    As a user in the EEA, your approval is needed on a few things. To provide a better website experience, toughnickel.com uses cookies (and other similar technologies) and may collect, process, and share personal data. Please choose which areas of our service you consent to our doing so.

    For more information on managing or withdrawing consents and how we handle data, visit our Privacy Policy at: https://maven.io/company/pages/privacy

    Show Details
    HubPages Device IDThis is used to identify particular browsers or devices when the access the service, and is used for security reasons.
    LoginThis is necessary to sign in to the HubPages Service.
    Google RecaptchaThis is used to prevent bots and spam. (Privacy Policy)
    AkismetThis is used to detect comment spam. (Privacy Policy)
    HubPages Google AnalyticsThis is used to provide data on traffic to our website, all personally identifyable data is anonymized. (Privacy Policy)
    HubPages Traffic PixelThis is used to collect data on traffic to articles and other pages on our site. Unless you are signed in to a HubPages account, all personally identifiable information is anonymized.
    Amazon Web ServicesThis is a cloud services platform that we used to host our service. (Privacy Policy)
    CloudflareThis is a cloud CDN service that we use to efficiently deliver files required for our service to operate such as javascript, cascading style sheets, images, and videos. (Privacy Policy)
    Google Hosted LibrariesJavascript software libraries such as jQuery are loaded at endpoints on the googleapis.com or gstatic.com domains, for performance and efficiency reasons. (Privacy Policy)
    Google Custom SearchThis is feature allows you to search the site. (Privacy Policy)
    Google MapsSome articles have Google Maps embedded in them. (Privacy Policy)
    Google ChartsThis is used to display charts and graphs on articles and the author center. (Privacy Policy)
    Google AdSense Host APIThis service allows you to sign up for or associate a Google AdSense account with HubPages, so that you can earn money from ads on your articles. No data is shared unless you engage with this feature. (Privacy Policy)
    Google YouTubeSome articles have YouTube videos embedded in them. (Privacy Policy)
    VimeoSome articles have Vimeo videos embedded in them. (Privacy Policy)
    PaypalThis is used for a registered author who enrolls in the HubPages Earnings program and requests to be paid via PayPal. No data is shared with Paypal unless you engage with this feature. (Privacy Policy)
    Facebook LoginYou can use this to streamline signing up for, or signing in to your Hubpages account. No data is shared with Facebook unless you engage with this feature. (Privacy Policy)
    MavenThis supports the Maven widget and search functionality. (Privacy Policy)
    Google AdSenseThis is an ad network. (Privacy Policy)
    Google DoubleClickGoogle provides ad serving technology and runs an ad network. (Privacy Policy)
    Index ExchangeThis is an ad network. (Privacy Policy)
    SovrnThis is an ad network. (Privacy Policy)
    Facebook AdsThis is an ad network. (Privacy Policy)
    Amazon Unified Ad MarketplaceThis is an ad network. (Privacy Policy)
    AppNexusThis is an ad network. (Privacy Policy)
    OpenxThis is an ad network. (Privacy Policy)
    Rubicon ProjectThis is an ad network. (Privacy Policy)
    TripleLiftThis is an ad network. (Privacy Policy)
    Say MediaWe partner with Say Media to deliver ad campaigns on our sites. (Privacy Policy)
    Remarketing PixelsWe may use remarketing pixels from advertising networks such as Google AdWords, Bing Ads, and Facebook in order to advertise the HubPages Service to people that have visited our sites.
    Conversion Tracking PixelsWe may use conversion tracking pixels from advertising networks such as Google AdWords, Bing Ads, and Facebook in order to identify when an advertisement has successfully resulted in the desired action, such as signing up for the HubPages Service or publishing an article on the HubPages Service.
    Author Google AnalyticsThis is used to provide traffic data and reports to the authors of articles on the HubPages Service. (Privacy Policy)
    ComscoreComScore is a media measurement and analytics company providing marketing data and analytics to enterprises, media and advertising agencies, and publishers. Non-consent will result in ComScore only processing obfuscated personal data. (Privacy Policy)
    Amazon Tracking PixelSome articles display amazon products as part of the Amazon Affiliate program, this pixel provides traffic statistics for those products (Privacy Policy)
    ClickscoThis is a data management platform studying reader behavior (Privacy Policy)