Answers
Scalar Products – Case Study
1. In order to persuade her manager, Sonia should put forward the fact that sales forecasting is the basic foundation starting point of both market planning and corporate planning. Moreover, in order to persuade her manager, she should emphasize upon the fact that sales forecasting facilitates the business to enable it to produce the required quantity at the right time (Sun et al., 2008). Moreover, sales forecasting also helps in making the arrangement in advance in context to the raw materials, the labor and equipments. She should also highlight upon the importance of sales forecasting as follows:
- Sales forecasting is the basis of sales budget and production budget. In sales budget, the resources are allocated for achieving the sales forecast and it clearly states what need to be sold and how much need to be sold by a salesperson that proves to be beneficial in efficiently managing and controlling the sales.
- Sales forecasting also aid in effective decision making (Davis & Mentzer, 2007).
- It acts a tool that guides the marketing, production and other business activities to achieve the desired targets.
Again, she should illustrate to her manager that marketing managers have to project the future trends in the target market and so without effective sales forecasting, the marketing plan would have unrealistic goals and might fall short of what is being promised to deliver (Kotler & Keller, 2006). On the other hand, Sonia should persuade her manager by suggesting that sales forecasting would prove to be beneficial in visualizing the real picture of sales which in turn can prove to be beneficial in setting sales target (Cravens & Piercy, 2006). Sales forecasting also proves to be beneficial in estimating the amount of raw materials that is required for future goals and thus helps in keeping the inventory ready for the peak periods. Effective sales forecasting is also important for planning the plant with output of desired capacity and finally, it also proves to be beneficial is predicting the expenses and planning the budget and maintaining an interrupted supply of the input resources.
2. The types of sales forecasts that Sonia can advice her manager to be useful for a newly established systems of sales control include:
Bottom-up forecasting
In this forecast, the market is divided into segments and then demand is calculated separately for each segment (McCarthy et al., 2006).
Top-down forecasting
In this forecast, the sales potential is estimated first and then sales quota is developed and finally sales forecast is constructed (Jobber & Lancaster, 2006).
On the other hand, the sales budgets that Sonia can advice her manager that can be useful for a newly established systems of sales control include:
Sales budget
Plan for illustrating the expected sales for future period and it is based upon the expected revenues (Shim & Siegel, 2008).
Sales expense budget
It is the plan of the expenses that are incurred by the sales department for achieving the planned and forecasted sales i.e. the salaries, commissions, travelling expense, entertainment expense and costs involved in training.
Administrative budget and profit budget
It involves the allocation of the resources for general administrative expenses (Hair et al., 2008).
References
Cravens, D. W., & Piercy, N. (2006). Strategic marketing (Vol. 7). New York: McGraw-Hill.
Davis, D. F., & Mentzer, J. T. (2007). Organizational factors in sales forecasting management. International Journal of Forecasting, 23(3), 475-495.
Hair, J., Anderson, R., Mehta, R., & Babin, B. (2008). Sales management: Building customer relationships and partnerships. Nelson Education.
Jobber, D., & Lancaster, G. (2006). Selling and sales management. Pearson education.
Kotler, P., & Keller, K. L. (2006). Marketing management 12e. New Jersey.
McCarthy, T. M., Davis, D. F., Golicic, S. L., & Mentzer, J. T. (2006). The evolution of sales forecasting management: a 20-year longitudinal study of forecasting practices. Journal of Forecasting, 25(5), 303.
Shim, J. K., & Siegel, J. G. (2008). Budgeting basics and beyond. John Wiley & Sons.
Sun, Z. L., Choi, T. M., Au, K. F., & Yu, Y. (2008). Sales forecasting using extreme learning machine with applications in fashion retailing. Decision Support Systems, 46(1), 411-419.
