Sales forecasting sets out targets for overall sales for products and is a goal for the firm to achieve

It influences other decisions:

• Production schedule
• Cash flow forecast
• Human resources decisions

Producing a Sales Forecast

• It may be based on historical / back data
• The firm can use market research to try and identify likely future trends
• It may be based on the firms best guess
• Nature of the forecast depends on nature of the firms product and the market situation 

Problems with forecasts

• Customer-buying behaviour suddenly changes
• Original market research was poor
• The experts got it wrong 

Reliability of forecasts

Forecasts are most likely to be correct when:

• Trend has been extrapolated and market conditions continued as before
• Test market is used and represents entire population
• Forecast is made by experts
• Firm is forecasting in the near future