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Sales Forecasting and Financial Analysis
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Why products fail?
• Over-priced/under-priced
• Too complicated
• Low quality
• Easily broken
• Not marketed well
• Doesn’t fulfill customer needs (useless)
• Hard to find (distribution channel problem)
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• Financial Analysis that should be calculated: - Assess Costs- Profit Projections- Feasibility Study with NPV; IRR; PP methods.
• Financial Analysis should be done after calculating Sales Forecast
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Sales ForecastingThings to consider:1. Products may have big potential to
sell but in fact they don’t sell well because of less marketing effort.
2. Depend on strategies and marketing programs that competitor do.
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Two types of Forecasting• Macro forecasting is forecast the
total condition of market. Explain total condition of market and analyze what will happen in the future.
• Micro forecasting is related to forecast how many unit will sell. Explain the market share of an industry and analyze the future.
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• Sales Forecast is hope of how many products will sell based on marketer and market conditions.
• SF can be based on 3 informations:- What consumers say- What consumers do- What consumers have done
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Things to Consider
• Data acuracy (the higher the acuracy, the higher the cost)
• Availability of information• Forecast Period• Product position on PLC (Product
Life Cycle)
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Do the Forecast
1. Market Demand2. Company Demand3. Do Sales Forecast!
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Market Demand is total products sold to a group of consumers, in a certain period and places, with certain circumstances.
Example: Define market demand for kids clothing (age 5 and below) in Surabaya
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• Group of consumer: Consumers who buy clothing for kids age 5 and below.
• Place: Surabaya• Period: 1 year • Marketing circumstance: sometimes
consumers buy the clothes not only in Surabaya, but also could be in Jakarta, etc.
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Data to be searched:
• Total number of kids age 5 and below in Surabaya: 400.000 kids.
• Average price for kids clothing: Rp 50.000,-
• Market Demand Estimation: Rp 20 M.
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• Company Demand (CD) is the amount of share that your company has in the market.CD = MD x % Market share
assume our market share = 10% so our CD is: Rp 2M.
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