sales budgeting forecasting
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Sales Budgeting andForecasting
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Definition Sales Budget
(a) Revenue goals
(b) Expense ceilings.
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Sales Budget- Basic Approaches
Top-down
approach.
Bottom-up
approach.
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Features & Objectives of
Sales Budget
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Sample Sales Budget
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Factors Influencing Sales
Budget Market size
Companys intention to curb selling
expenses.
Companys financial resources.
Market potential.
Sales potential.
Production efficiency.
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Steps in Determining Sales
Budget
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Methods of Determining Sales
Budgets Percentage of Sales Method.
Competitive parity method.
Objectives and task method.
What you can afford method.
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Percentage of Sales Method
Advantages Simple and easy to calculate.
Maintains balance between revenues and
selling expenses. Effective for stable marketing environment.
Disadvantages Lacks logic.
Percentages are subject to approximation.
Not applicable for new products.
Suicidal for fluctuating market situations.
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Competitive Parity Method
Advantages Comparatively a safe practice.
Reflects the collective wisdom of the
industry. Prevents marketing warfare.
Disadvantages Less practical as sales objectives and
problems of companies are different.
No assurance that competitors spending
policy is correct.
Inability to reach target customers
meaningfully. 10
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Objectives and Task Method
Advantages Element of realism.
Flexible.
Periodic review of budgets possible. Disadvantages
Sales mangers need to posses sufficient
knowledge and wisdom.
Difficulty in understanding major sales
objectives.
Ignores past sales, forecasted sales and
competitors budgets.
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What You Can Afford Method.
Capacity to spend decides thebudget.
Advantages Simple, safe and flexible.
Disadvantages Lacks planning process.
Arbitrary discretion in deciding budget
levels.
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Sales Forecasting
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Objectives of Sales
Forecasting To decide on sales quotas and
territories.
To determine sales budget.
To attain proper control of inventories.
To set up performance standards.
To identify sales opportunities.
To research out sales and market
potentials of the firm.
To gather idea of the image of the
firm. 14
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Factors Influencing Sales
Forecasting Fluctuations in business environment.
Future state of the economy.
Political conditions of a nation.
Market characteristics.
Situational factors.
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Importance of Sales
Forecasting
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Approaches of Sales Forecasting Top-down
Approach
Bottom-up
Approach
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Methods of Sales
Forecasting Qualitative
Jury of Executive
opinions.
Delphi techniques. Sales force
composite.
Survey of buyers
intentions.
Quantitative
Moving average
method.
Exponentialsmoothing.
Regression
analysis.
Time seriesanalysis.
Econometric
models.
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