This is no single approach to the forecasting in marketing. The techniques employed range from complex satistical analysis based on masses of data to the forecaster institution based on experience. The information needed for forecasting comes from a variety of sources. Government agencies example central bank of nigeria, federal office of statistics etc . Economic association nigeria economic society, manufacturers association of nigeria, nigeria employers consultative association e.t.c., university research bureaux, salespeople market research, customer and companies record htc or provide material helpful to the forecast of stop once the data are gathered various techniques all kinds of information are used for the actual forecasting. Some of the more common forecasting methods are discussed below:
EXECUTIVE JUDGMENT (OPINION OF MANAGEMENT): this method consists of obtaining options of the top executives of the firm or an industry regarding future sales volume. These are usually informed opinion space on valid measures. Forecasting by executive opinion alone is risk since such opinions could be simply intuition or guesswork.
SALES FORCE COMPOSITE: this is a build up method that may be used To forecast sales or to estimate market potential. The views of individuals salesperson and middlemen are combined to produce the sales forecast. the wisdom of using this approach hinges on the salesperson and his or her understanding of market conditions. This method can be used advantages li if the firm has competent, high calibre salespeople. The method is also useful when selling to a market composed Of relative view, but large, customers. However, the sales of force usually do not have the time or the experience to do the research needed in forecasting future sales .
PAST SALES AND TREND ANALYSIS: this method eases the forecast entirely on past sales. Sales forecast is obtained by applying a growth factor 2 past sales record which is usually a flat percentage say 10%. it is determined by observing the trend of sale and the expectation that the trend will continue in the future. Since this is unlikely, using past sales as the basis of future sales is a precarious approach to forecasting.
CUSTOMERS ESTIMATE (SURVEY OF BUYER INTENTIONS: this method surveys a simple of potential customers. The customers are asked how much of the stated product they would buy at a given price during a specified future time.. this is no longer a guarantee of sales but it indicates what is possible if the customers terms can be met.
a major problem of this method is how to select the simple Of potential buyers. It could be very costly and large amount of time will be required. one major limitation of this method is that what customers say might be different from what they do. Surveys of buying intentions inevitably show an inflated measure of market potential.
TEST MARKETING: this method requires that a firm market each product in a limited geographic area and from this sample, projects the company's sales potential market share over a large area. It is used when the objectives is to test whether sufficient market exists for a new product. This method can tell management how many people actually buy the product, rather than how many people say they intend to buy. The disadvantage of this method is that it is expensive in time and Monet it may result in test market wars if a competitor got to know that a company is test marketing its products.
MARKET RESEARCH: market research provides the basis of information with which management can make informed decisions. In utilising market research to assist in the process of sales forecasting, make complex dimensions of the market must be accounted for. All factors in internal and external marketing environment and orders which pertain to the future size and quality of markets for particular goods or Services are measured and analysed.
the problem of inadequacy, inadequacy and lack of timeliners is a constraint on market research method. at best, the results of market research are analysed and evaluated with large dose of good judgement thrown in.
CORRELATION ANALYSIS: this method tries to establish a close relationship which may exist between two sets of data example but rate and baby food and clothing and related the number of motor vehicles on the road is related to the need of fuel, accessories and servicing, the estimate of how much disposable income in nigerians have it as basis for forecasting future expenditure for leisure and other non essential activities. so this method may give an item of total quantity of baby food required, it does not give Nestel food the quantity of nutrend it may be sold. one other limitation of correlation analysis is that it requires a lengthy sales history which have existed before and they must assume that the relationship must continue. These may be highly unrealistic assumption. The other major drawback is that very few marketing executives understand correlation analysis and can actually do the necessary competitions.
