METHODS USED FOR FORECASTING SALES .
A great variety of methods are available for forecasting market demand and sales of a company. We shall discuss these methods sequentially as under,
Jury method/executive Opinion Method
The jury method is one of the commonly employed methods of sales forecasting. It is also known as executive opinion method. Judgment is the base in this method. This is true of both the â€˜top jury methodâ€™ and the â€˜percolated jury methodâ€™. The difference is that in the former, the participants are limited to the top executives and in the latter, a large number of marketing/sales executives participate. In both, the participants exercise their judgment and give their opinions. The final forecast is arrived at by averaging these opinions. Evidently, for the forecasts arrived at by this method to be reliable, the executives participating must have versatile experience and sound knowledge of the business. They must also be well informed about the overall economic environment and the conditions prevailing in the industry. They should also know the strengths and weaknesses of their firm.
Survey of Expertâ€™s Opinions
This is yet another judgment based method of sales forecasting but is somewhat different from the jury method. In the jury method, opinions of executives give rise to- the forecast. In survey of expert opinions, experts in the concerned field, inside or outside the organization, are approached for their estimates. This method is used more in developing total industry forecast than company sales forecast.
The Delphi Method
The Delphi method too is a kind of survey of expert opinion method. It is used more for working out broad-based, futuristic estimates, rather than sales forecasts. In this method, a panel of experts in the field is interrogated by a sequence of questionnaires. Any information that is available with any one member of the panel is passed on to others as well, enabling all members to have access to all the available information.
This technique eliminates the â€˜bandwagonâ€™ effect of majority opinion. The panel members are asked to react to a checklist of questions, which are significant to the forecast that is attempted. Their opinions and reactions are analyzed and where there is a sharp difference on an issue, interchanges are permitted and the final forecasts are presented.
Sales Force Composite Method
As per the sales force composite method, the sales forecasting is done by the sales force. It is also a judgment based method. Each salesman develops the forecast for his respective territory; the territory-wise forecasts are consolidated at branch/area/region level; and the aggregate of all these forecasts is taken as the corporate forecast.
It can be easily seen that the sales force composite method is similar to, but somewhat different from the jury method.â€™ The difference is that while the jury method depends on the judgment of a few executives, the sales force composite method seeks to aggregate the judgment of the entire sales force. It is a â€˜grassroots methodâ€™; the forecast originates at the grassroots in micro-level sales territories; the judgment of grassroots level people who are closest to the marketplace forms the basis for the forecast.
User Expectation Method/ End Use method / Survey of Buyersâ€™ Intentions
As per â€˜user expectationâ€™ or â€˜end useâ€™ method, the various users of the product under forecasting are listed first; then their individual likely demand of the product is ascertained ; and from that data, the demand forecast for the product is consolidated. This method is alternatively known as â€˜survey of buyersâ€™ intentionsâ€™. The survey of the buyers will give an idea of the total likely consumption of the product, the buying plans of the users and the likely market share for the company doing the survey. The user survey can be made either on a sampling basis or on a census basis, depending on the size of the user group to be covered. Census survey will naturally provide a more reliable forecast.