A number of factors influence or affecting the sales forecasting of a firm. Therefore, the sales forecasts must take into consideration changes that are taking place in the environment.
Sales forecasting is an estimate of sales during some specified future period of time and under a pre-determined marketing plan of the firm.
Factors Affecting Sales Forecasting
Some of the important factors affecting sales forecasting are as follows:
1. General Conditions
A major influencing factor in future self-development is the general state of the economy.
These general conditions are related to government taxation policy, regulation of industries, pricing policies, Bank credits, import-export policies, etc. These influence future sales.
Therefore, such environmental factors are to be studied well before making sales forecasts.
2. Changing Market Conditions
The changes taking place in the primary demands of the product should be considered while making forecasts.
If basic demand factors are in a slump, the future sales of the firm will be affected.
The manager must be aware of any basic changes in the primary demand for the industry’s output. Present market behavior should also be analyzed.
Related: 37 Essential Qualities of Successful Entrepreneur (Must Know).
3. Conditions within the Industry
A firm obtains its sales volume from total industry sales.
Therefore, any changes within the industry have an impact on the firm.
Whatever volume new producers in industry gain must come from existing companies.
Thus, the sales forecasts for those companies may have to be revised downward.
The total sales of a company the part of the total sales of the industry belongs.
Therefore the changes to be effected in the industry will certainly influence the sales of the firm.
4. Socio-Economic Conditions
The social economic and political environment in a country may also be affecting the sales forecasting.
This environment contains elements like per capita income, the standard of living, urbanization, monetary circulation, family system, geographical dimensions, consumer tastes, styles, and fashions, etc.
These conditions are to be considered while making a sales forecasting.
Related: How to Become a Successful Salesman? 33 Qualities (Complete List).
5. Internal Policies
The internal policies such as the advertising and sales promotion policies, distribution policy, pricing policy, organization structure, profits policy, etc. are the important factors which influence the estimated sales of the firm.
6. Marketing Plans
Any changes in the price structure, channels of distribution, promotional plans, products, or other internal marketing policies may influence future sales.
Formulating a realistic sales forecast is impossible without taking price changes into consideration
If the firm planned to alter its channels of distribution or its advertising expenditures, these actions would also influence future sales.
Related: 8 Major Importance of Sales Policies (With Examples).
7. Foreign Trade Conditions
The foreign trade conditions, such as controls on export imports, availability of foreign exchange and trade restrictions, etc. also affecting the sales forecasting process.
8. Product Mix
The wider is the company’s product mix, the greater will be its strength to deal with its customers directly.
Similarly, consistency in the company’s product mix ensures greater opportunity homogeneity or uniformity and similarity in its marketing channels.
9. Sense Of Effectivity
The central point of all activities of the entrepreneur is the achievement of the goals and objectives.
He is confident about his ability and resources.
So, he believes in solving the problems, rather than avoiding them.
That way, the realization of efficacy keeps the entrepreneur, activity-oriented and physiologically motivates him for initiatives, Creativity, self-confidence and solving the problems. 9 Major Steps in Process of Sales Motivation (Explained).
10. Infrastructural Facilities
The economic environment is directly affected by infrastructural facilities and composition.
The countries, where the infrastructural facilities are sound, economic development will be rapid and strong in those countries.
To meet the challenges of increased and acute competition, it is necessary to expand the size of the sales organization.
Thus, now you know the factors affecting sales forecasting.
The best practice is to watch out your local competitors and study their business models quite thoughtfully to gain insights into the ins and outs of the market.
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