6.4.1

Sales Forecasts

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Sales Forecasts

Sales forecasts are used to predict the level of future sales. This helps a business make decisions and anticipate performance in the short and long term.

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Economic variables

  • Economic variables influence sales forecasts.
  • This is because demand for a product depends upon variables such as interest rates, indirect taxes, and exchange rates.
  • An economy's overall condition (i.e. in a period of boom or bust) will influence the total level of consumption in the economy.
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Competitor actions

  • Sometimes sales forecasts are off-kilter because they have not anticipated the actions of competitors.
    • Generally, this is why sales forecasts are too high.
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The limits of sales forecasting

  • Sales forecasting poses difficulties:
    • Start-ups have no existing information to base their forecasts off.
    • Forecasts depend upon the elasticity of demand.
    • Forecasts cannot anticipate new entrants in the market and the influence this will have.
    • Forecasting could become political as managers face shareholder pressure. This means there may be a large discrepancy between the forecast and the reality.

Jump to other topics

1Exploring Business

2Marketing Campaigns

3Business Finance

4International Business

5Principles of Management

6Business Decision Making

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