What is Sales Forecast? Definition of Sales Forecast, Sales Forecast Meaning and Concept
Sales forecasting is a common practice in business organization and the field of marketing. Through its use, companies are able to calculate the future demand for their products in the market and, in this way, adjust their economic activity.
Through sales forecasting, companies obtain accurate and useful information when facing new business challenges or implementing significant changes in their product ranges.
It is therefore an essential section in any business plan and marketing plan, since it allows to predict in a certain way the future of the company based on its characteristics and its historical evolution.
It is common for the sales forecast to be made for annual periods, coinciding with the different exercises. Thus, the development of a good sales forecast is vital in relation to the preparation of a budget and the forecast of income and expenses of the firm.
This marketing concept is also known by its English name: forecast.
Sales Forecast Features
The sales forecasting method carries with it a series of important features for the company:
- It is a self-assessment or self-knowledge method for companies.
- It is carried out with plans with different terms; that is, for specific periods.
- Although based on real and measurable data and calculations, the forecasts are still estimates subject to all kinds of change.
- The maximum possible accuracy must be pursued, according to a framework of reality and coherence with the size and market power of each company.
- It can be carried out by the company itself or by resorting to another specialized external company, by means of subcontracting.
Sales Forecast Factors
These are the main factors to consider:
- Internal factors: The historical data of the company itself in the sector or the evolution of product sales, as well as inventory management, its level of development in R&D or other bureaucratic and administrative factors.
- External factors: Importance of seasonal sectors, fashions and trends in each sector, the general economic situation or even fluctuations in the prices of raw materials, for example.