N5 Sales Management
Disadvantages • It is very time consuming. • Executive opinions are used and not direct market factors.
VIDEO: Watch the following video explaining the Delphi technique:
http://www.youtube.com/watch?v=FFfKOSTftcs&index=5&list=PL7qlCRl1JlA_YAz-WpegFb9E3Gm- zHbHg
5.3 Sales force composite
With this method, the forecaster asks the opinion about future sales from every salesperson working in the field. Each salesperson will project a number he thinks he will make during the forecast period. Salespeople will use previous sales figures as well as their experience in making their prediction. Managers will assess the numbers and make the necessary adjustments.
Advantages • The knowledge and expertise of the people closest to the customers are used. • The salespeople are aware of trends, for example customers buy smaller cars because of high petrol costs; buying motives, for example customers become more health conscious; and buying behaviour of customers, for example they buy mainly over weekends.
• The sales force is under more pressure to make the forecast happen. • Salespeople have greater confidence in forecasts, quotas/targets (Module 5) and budgets. • Forecasts are developed by type of product, per territory, customer type and time period, so a final detailed forecast is readily available.
Disadvantages • The sales force might lack training in forecasting methods. • Their daily contact with their territory may obscure an objective picture. • Immediate, personal problems may lead to excessively low forecasts, while recent successes may make salespeople too optimistic.
• If forecasts are used for setting sales quotas and determining compensation, the forecasts become distorted to suit their personal interests.
5.4 Time series analysis
Time series analysis uses the analysis of historical data to predict future demand. A time series is a set of observations on variables such as sales. Quarterly, weekly and daily figures are subjected to time series analysis. Forecasting is based on the assumption that patterns observed in changes in past sales levels can be used to predict future sales. A time series can comprise different types of movements or variations: trends, cyclical, seasonal and random variations. A trend is a basic long-term underlying pattern of growth, stability or decline in the series.
Fluctuations in sales depend on the general state of business, the level of demand and the activities of competitors. When a fluctuation lasts longer than a year, it is said to be a
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