Sales Forecasting Methods:

A sales forecasting method is a procedure for estimating how much of a given product (product line) can be sold if a given marketing programme is implemented. No method is full-proof and each is subject to some degree of error. In well managed companies the practice is not to rely upon one method but to combine many methods to minimize the chances of errors.

ERRORS

            •           Forecasting means estimating the unknown. It is like gazing into the future.

            •           Rarely can anyone predict the future accurately.

            •           Forecasting then only reduces the forecasting error.

           •          The two errors common are the random error. i.e. predicts a certain percentage say 4% of actual, plus or minus without consistently overestimating or consistently under-estimating sales. Systematic error (the tendency to consistently over-estimate or under-estimate sales).

A good forecasting method reduces random error as far as possible and eliminates systematic error.