What is Sales Forecasting? Meaning and Definition

·

What is Sales Forecasting? Meaning and Definition

Sales forecasting is the process of estimating future sales. Accurate sales forecasts enable companies to make informed business decisions and predict short-term and long-term performance. The sales forecast is the estimate of the number of sales to be expected for an item/product or products for a future period of time. Except the industries based on job order, almost all the enterprises produce in advance to meet the future requirements. Thus accurate sales forecasting is essential for an enterprise to enable it to produce the required number of items at right time.

Sales Forecasting is explained in Meaning and Definition.

Any forecast can be termed as an indicator of what is likely to happen in a specified future time frame in a particular field. Therefore, the sales forecast indicates. As to how much of a particular product is likely to be sold in a specified future period in a specified market at the speci­fied price.

Accurate sales forecasting is essential for a business house to enable it to produce the re­quired quantity at the right time. Further, it makes the arrangement in advance for raw mate­rials, equipment’s, labor etc. Some firms manufacture on the order basis. But in general, the firm produces the material in advance to meet future demand.

Forecasting means estimation of quantity, type, and quality of future work e.g. selling. For any manufacturing concern, it is very necessary to assess the market trends sufficiently in ad­vance. This is a commitment on the part of the selling department and future planning of the entire concern depends on this forecast.

The management of a firm is required to prepare. Its forecast of the share of the market that it can hope to capture over the period of forecasting. In other words, it is an estimate of the sales potential of the firm in the future. All plans are based on the selling forecasts. This forecast helps the management in determining as to how much revenue can be expected to be realized. How much to manufacture, and what shall be the requirement of men, machine, and money.

Definition:

It is an estimation of sales volume that a company can expect to attain within the plan period. A sales forecast is not just a sales predicting. It is the act of matching opportunities with the marketing efforts. It is the determination of a firm’s share in the market under a specified future. Thus sales forecasting shows the probable volume of sales.

According to the American Marketing Association,

“Sales forecast is an estimate of Sales, in monetary or physical units, for a specified future period under a proposed business plan or programme and under an assumed set of economic and other forces outside the unit for which the forecast is made.”

According to Candiff and Still,

“Sales forecast is an estimate of sales during a specified future period, whose estimate is tied to a proposed marketing plan and which assumes a particular state of uncontrollable and competitive forces.”

Thus we can define sales forecasting as, estimation of type, quantity, and quality of future sales. The goal for the selling department is decided on the basis of this forecast. These forecasts also help in planning the future development of the concern. It forms a basis for production targets.

From above, looking to its importance, it is essential that the sales forecast must be accurate, simple, easy to understand and economical. Thus we can say that a sales forecast is an estimate of the number of sales for a specified future period under a proposed marketing plan or programme. They can also be defined as an estimate of selling in terms of money or physical units for a specified future period under a proposed marketing plan or programme and under an assumed set of economic and other forces outside the unit for which the forecast is made.

More News:

  • How to identify silent churn in your small business

    A guide to Identify silent churn is vital for small business. Discover effective strategies to monitor customer activity, analyze lifetime value, gather feedback, and implement retention campaigns. Turn disengaged customers…

  • 10 best business analytics services

    Discover the best 10 business analytics services with key features, use cases, and a comprehensive comparison to help you make informed data-driven decisions for your organization. Explore the 10 best…

  • Product Differentiation Strategy Examples

    Explore effective product differentiation strategy with real-world examples from leading brands like Apple, Tesla, and Patagonia. Learn how innovation, quality, branding, customer experience, and sustainability can help businesses stand out…

  • What is a cost leadership strategy?

    A cost leadership strategy focuses on becoming the lowest-cost producer in an industry, enabling a company to offer competitive prices while maintaining profitability. Discover its key components, advantages, challenges, and…

  • How to conduct a swot analysis for your small business

    Conduct a comprehensive SWOT analysis for your small business with this detailed guide. Learn to identify your strengths, weaknesses, opportunities, and threats to drive informed decision-making and strategic growth. Unlock…

  • What is Consumer Profile?

    A consumer profile comprehensively represents a target audience segment, detailing demographics, behaviors, and preferences. Businesses use consumer profiles to optimize marketing strategies, enhance customer experiences, and drive conversions, ultimately fostering…

Comments

One response to “What is Sales Forecasting? Meaning and Definition”

Leave a Reply

Your email address will not be published. Required fields are marked *