Definition: The Market Segmentation means, breaking down the entire consumer market into the subdivision of customers who share the similar set of needs and wants and have more or less related characteristics. The purpose of the market segmentation is to categorize the heterogeneous market into the groups that are homogeneous in nature so that firms can focus completely on a … [Read more...] about Market Segmentation
Market Survey
Definition: Market Survey is another most widely used sales forecasting method which is used to gather information related to the market that cannot be collected from the company’s internal records or the external published sources of data. The market survey method is typically employed in the situations where the primary data or first-hand data is required to forecast the … [Read more...] about Market Survey
Analytical and Statistical Methods
Definition: There are several Analytical and Statistical methods of sales forecasting, that a firm can employ on the basis of its forecasting needs. These methods are listed below: Simple Projection Method: Under this method, the firm forecast the current year’s sales by simply adding up the expected growth rate to the last year’s sales. This growth rate can be determined … [Read more...] about Analytical and Statistical Methods
Market Test
Definition: The Market Test is an experiment conducted before the commercialization (launch) of a new product to find out the facts about the product such as Is the product the right one? Is the product reasonably priced? etc. On the basis of such findings, the firm may either accept or drop the product idea. The Test Marketing is one of the methods used under the Market … [Read more...] about Market Test
Substitution Method
Definition: In Substitution Method or a Replacement Method, the management first works on the sales forecast of the existing product, using any methods of forecasting and then uses this data to forecast the sales of a new product that will be launched as a substitute for the old product. Simply, the method used to forecast the sales of a new product on the basis of the sales … [Read more...] about Substitution Method
Market Share Method
Definition: The Market Share Method is yet another sales forecasting method, wherein the company first works on the industry forecast, then applies the market share factor and then finally arrive at the company’s forecast. Simply, the company’s sales forecast is deduced from the data gathered on the industry sales and from the market share of the company. The market share of … [Read more...] about Market Share Method
End Use Method
Definition: Under the End Use Method, also called as the User Expectation Method, the list of several users of the product under forecasting is prepared first, who are then asked about their individual purchasing patterns and then from such information the complete product demand forecast is ascertained. Simply, the method used to know the buyer’s likely consumption of the … [Read more...] about End Use Method
Sales Force Composite Method
Definition: The Sale Force Composite Method is a sale forecasting method wherein the sales agents forecast the sales in their respective territories, which is then consolidated at branch/region/area level, after which the aggregate of all these factors is consolidated to develop an overall company sales forecast. The sales force composite method is the bottom-up approach … [Read more...] about Sales Force Composite Method
Survey of Expert’s Opinions
Definition: In Survey of Expert's Opinions, the specialized group of people in the concerned fields, from both inside and outside the organization, are approached and asked to give their opinions on sales trend. The Survey of Expert's Opinions is the most common method of sales forecasting, employed by the organizations. This method is also based on the judgment of … [Read more...] about Survey of Expert’s Opinions
Jury Method
Definition: The Jury Method also called as an Executive Opinion Method is a sales forecasting method, wherein the executives from different departments come together and forecast sales for the given period, on the basis of their experience and specialization. The jury method is based on the judgments, the top executives of Marketing, HR, Finance, Production department come … [Read more...] about Jury Method