IB Business Management Marketing 4.3 Sales Forecasting

Seasonal variations.

Regular and repeated variations that occur in sales data within a period of 12 months or less.

Moving-Average Method

The simplest method of time-series forecasting; assumes that the time series has only a level component plus a random component.

*Disadvantages* of *Moving-Average Method* of sales forecasting

1. Fairly complex calculation. 2. Forecasts further into the future become less accurate as the projections made are entirely based on past data 3. Forecasting for the longer term may require the use of more qualitative methods that are less dependent on past results.

*Advantages* of *Moving-Average Method* of sales forecasting

1. Useful for identifying and applying the seasonal variation to predictions. 2. Reasonably accurate for short-term forecasts in reasonably stable economic conditions. 3. Planning for each quarter in future.

Sales forecasting

A quantitative technique that attempts to estimate the level of sales a business expects to achieve, over a given time period.

Random variations

May occur at any time and will cause unusual and unpredictable sales figures; e.g. exceptionally poor weather, or negative public image following a high-profile product failure.

Trend

Underlying movement of the data in a time series.

Cyclical variations

Variations in sales occurring over periods of time of much more than a year.