Sales Potential Vs Sales Forecasting:

We have already said that sales potential are estimates of the maximum possible sales open to a specified company selling a good/service. Sales potential are derived from market potentials after analysis of historical market-share relationships and adjustments for recent or impending changes in company's and competitors selling strategies.

A company's sales potential and sales forecast are not always identifiable and in most instances the sales potential is larger than the sales forecast. There are several possible reasons for this:

(a) Some companies do not have sufficient production capacity to capitalize on the full sales potential.

(b) Others have not developed distributive networks capable of reaching every potential customer.

(c) Others are limited financially and therefore do not attempt to realize their total sales potential.

Others are more profit oriented than sales oriented so they seek to maximize profitable sales and not possible sales.

Note

estimate for sales potential indicates how much a company could sell if it had all the necessary resources, and desired to use them for this purpose. On the other hand the sales forecast is a related but different estimate. It indicates how much a company with a given amount of resources can sell if it implements a given marketing programme.