This document discusses sales forecasting methods used by Asian Paints and Coca-Cola. It describes Asian Paints' sales forecasting process which involves annual retail audits, regional forecasts by depot managers, and manufacturing forecasts using historical data and software. Coca-Cola's sales have been declining in recent years as consumers shift to healthier options. Quantitative forecasting methods include moving averages, ratios, and regression analysis. Qualitative methods rely on expert opinions and surveys. Accurate forecasting is important for cash flow, purchasing, and planning.

1. Sales and Distribution Management
Topic: Sales Forecasting
To Prof:
By Group:

2. Sales
forecasting
examples:
1) Asian Paints
2) Coca-Cola
•Sales
Forecasting
process.
•Importance
of Sales
forecasting.
•Errors in
sales
forecasting.
Methods of
Sales
forecasting
Elements of
good sales
forecasting.
Factors
affecting
internal an
external
factors.
•Advantages
and
Disadvantages
of Sales
Forecasting
Introduction
Meaning
Forms of
Forecast
Group Members and Flow of presentation

4. • According to Henry Fayol,
“To foresee,
means both, to
assess the future
and make
provisions for it.”

5. Forms of Forecast
Long
Term
Medium
Term
Short
Term

6. Short Term Forecast
Period: 3-6 months

7. Medium term
Forecast
Period: 6mnths-2years

8. Long Term Forecasting
Period: 3-5years

9. External Factors Affecting Sales
External
Factors
Seasonality
of the
business
State of the
economy
Direct And
Indirect
Competition
Political
Events
Styles Or
Fashions
Consumer
Earnings
Population
Changes
Weather
Productivity
changes

10. Internal Factors Affecting Sales
Internal
Factors
Labor
Problems
Credit Policy
Changes
Sales
Motivation
Plans
Inventory
Changes
Working
Capital
Shortages
Price
Changes
Change in
Distribution
method
Productivity
Capacity
Changes
New
Product
Lines

11. Elements Of a Good Forecast
Timely Reliable Accurate
Meaningful Written Easy to Use

12. Cash Flow
Tracking
Purchasing
Planning
Lack of Sales History
Difficulty Forecasting the
Industry and Competition
Tendency to Be Optimistic
Consumer Behaviour is Hard
to Predict
Management Inflexibility
Advantages Disadvantages

13. Explanation
Advantages
• Cash Flow
Knowing whether your revenues are likely to
grow or shrink in coming months keeps you from
spending at a time when you should be
conserving cash to survive a recession.
• Tracking
Having a tradition of forecasting sales on a
quarterly, semi-annual or annual basis not only
helps you plan your business, it also increases
your corporate knowledge base. When changes in
the economy arise, you can always go back to
your previous forecasts for hints on what has and
has not worked in the past.

14. • Purchasing
Buying too much or too little inventory can be a
business disaster. By forecasting your sales, you
will have a better idea of how much to buy and
whether it will be advisable to add additional
investment in marketing to take advantage of
improving economic conditions.
• Planning
Having a good idea of future revenues and where
they will be generated in your business allows you
to plan the best way to take advantage of future
changes in the economy. Uncertainty is a
roadblock to besting your competition by
expanding at just the right moment.

15. Disadvantages
• Lack of Sales History
Sales forecast are based upon what the company has
been able to achieve in the past. Early stage
companies do not have significant revenue history to
rely on. They may be anticipating rapid growth, but
forecasting exactly what the growth rate might be is
difficult.
• Difficulty Forecasting the Industry and
Competition
Industry conditions and the competitive environment
both affect a company's sales potential. You must
forecast how you believe the industry will grow in the
next year and whether competition will become more
intense. Both of these factors are in flux.

16. • Tendency to Be Optimistic
You should always involve the members of your
sales staff in the forecasting process. They are in
close contact with your customers and have a
good feel for how the business environment is
now and is likely to be next year.
• Consumer Behaviour is Hard to Predict
A small-business owner and his marketing staff are
never absolutely certain their marketing message
will resonate with the target customers, or
whether they have chosen the best media to
deliver the message. This uncertainly leads to both
revenue surprises and disappointments.
Ultimately, the customers wield the power.

17. • Management Inflexibility
The effectiveness of the sales forecasting
process can be limited by the inflexibility of the
company owner, if you view the sales targets as
set in stone. If significant negative variances to
forecast occur, some owners don't adjust them
but instead try to motivate the sales staff to
work harder.

18. METHODS OFSALES FORECASTING

19. • Methods of sales forecasting vary from simple judgement or
subjective assessment to ratio analysis to more sophisticated
statistical or quantitative techniques. Generally speaking, the
longer the periods, the more rigorous or quantitative should
be the methods.
• Various methods of sales forecasting can be broadly divided
into two categories:
• A. Qualitative techniques
• B. Quantitative techniques

20. METHODS OF SALES
FORECASTING
A. QUALITATIVE
TECHNIQUES
1. Expert opinions
2. Delphi techniques
3.Consumer survey methods
4.Sales force estimate
5. Sales hierarchy estimate
B. QUANTATIVE
TECHNIQUES
1.Moving average
2.Sales ratio method
3.Market share projection
4.Regression analysis

21. Qualitative techniques
• Qualitative techniques are essentially judgemental or
subjective techniques based on the personal assessment of
sales managers, industry experts or consultants. Companies
use one or more of five qualitative methods.
1. Expert Opinion
2. Delphi Techniques
3. Consumer Survey Method
4. Sales Force Estimate

22. Quantitative techniques
• Quantitative techniques of sales forecasts are statistical or
mathematical methods and are mostly based on time series
analysis. The methods from simple extrapolation of past trends to
more sophisticated regression analysis and computer models. We
discuss here four methods which are more commonly used :
1. Moving Averages
2. Sales Ratio Method
3. Market Share Projection
4. Regression Analysis

23. SALES FORECASTING PROCESS
Setting
goals for
forecasti
ng
Gathering
data
Analysis
of data
Choosing
best
model for
forecasti
ng
Forecasti
ng
Evaluatio
n of
forecastin
g
outcome

24. IMPORTANCE OF SALES FORECASTING
• Companies that implement accurate sales forecasting processes realize important
benefits such as:
Optimized cash flow
Knowing when and how much to buy
In depth knowledge of customer and the product they order
The ability to identify the pattern or trend of sales
Determine the value of a business above the value of its current assets
Ability to determine the expected return on investment

25. ERRORS IN SALES FORECASTING
• Possible reasons for errors in forecasting:-
 Flaws in data used in forecasting process
 Insufficient data
 Unpredictable economic and socio-political environment
 Non realistic and inaccurate assumptions
 Technical and technological changes
 Shifts in economic structure
 Administrative errors

28. Combination of top down and bottom up approach.
Forecasts based on factors such as:
Historical data
Economic Parameters
Seasonal Variations
Festivals, ceremonies etc.
Weekly reviews to adjust monthly forecasts
Forecast are region wise, they are further broken
down into cities, towns and villages by sales managers

32. CSD(carbonated soft drink) Market share division
Coca Cola (3300 products)
Including Diet-cola, Sprite and Fanta over 300
countries)
43.3%
Pepsi
(Diet-Pepsi, Mountain Dew and 7up) 29.9%
Dr. Pepper Snapple Group
10.3%
Total
83.5%

33. Sales declining
2009 9.4 billion cases
2008 2%
2007 3%
2006
2005

34. • In the middle of the decade
consumers began shifting away
from CSD and started purchasing
products that are healthier.
• Tea, bottled water and other
non-carbonated beverages have
been gaining market share from
the CSD producers.

36. Sales
forecasting
of Asian
Paints
Process
Decisional
level
Manufac
turing
Delivery

37. Process Forecasting
•Annual Retail audit conducted at dealer & Territory level
•All products are accounted.
•Audit gives the dealers actual potential & approximated
turnover
•Competitor turnover is also recorded.

39. Forecasting at Decisional Level
• Regional level forecasting involving the Depot managers, RM & DM.
• GM Involved in discussions.
• Company level focus products identified.
• Discussions based on regional level CAGR(compound annual growth
rate) for past 5 years.
• This data gives the trend of sales at a product category level.

41. Manufacturing Forecast
•Forecasting activity carried out also by production.
• “ i3” software – highly sophisticated, simplifying the activity.
• 5 yrs. data considered & a forecast created by the software.
•Also movement of SKU’s(Stock keeping unit) at depots, regions
considered in this activity

42. •Deliberations between production & sales.
• Trends may give a different forecast against plans forwarded
by sales.
• A midpoint reached & production planning for the year is
loaded onto the system.
•Sales has an option of minor modifications in production for
each month.
•This activity reduces the chances of dead stock.

44. Delivery Forecasting
• Once the forecasts are finalized, activities are planned to deliver
the figures.
• E.g. : for 2009/10- 1st half of the year will be slow. This period will
focus at influencer & consumer activities.
• Shop meets for low end painters.
• Contractor meets & training programmed for influencers.
• In-shop selling activities (all show casing & educating on new &
focus products use & properties)

46. Conclusion
Sales forecasting is a key element in conducting business. The
realism that good forecasting provides can help in develop
and improving strategic plans by increasing knowledge of the
marketplace. The forecast that sales force provides is the
source of information that allows you to manage virtually all
aspects of your business.

47. • http://www.gavinpsmith.com/2012-sales-forecast-analysis-coca-cola/
• https://en.wikipedia.org/wiki/Top-down_and_bottom-up_design
• https://en.wikipedia.org/wiki/Top-down_and_bottom-up_de