Sales Forecasting and Financial Analysis

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)

• 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

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.

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.

• 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

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)

Do the Forecast

1. Market Demand2. Company Demand3. Do Sales Forecast!

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

• 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.

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.

• 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.