DEMAND FORECASTING ENTAILS ESTIMATING SALES OF A PRODUCT DURING SOME FUTURE TIME PERIOD.THERE ARE TWO BASIC PROCEDURES USED TO FORECAST SALES:PREDICTIONS OF MARKET DEMAND MAY BE BASED ON TECHNIQUES RANGING FROM UNINFORMED GUESSES TO SOPHISTICATED STATISTICAL MODELS. COMMON METHODS INCLUDE:Slide 4DEMAND FORECASTING ENTAILS ESTIMATING SALES OF A PRODUCT DURING SOME FUTURE TIME PERIOD.•A sales forecast is an estimate or probable sales for one company’s brand of the product during a stated time period in a specific market segment and assuming the use of a predetermined marketing plan.–It is based on a specific marketing plan.–It can be expressed in dollars or product units.–It is best prepared after market potential and sales potential have been estimated.–It typically covers a 1-year period.–Marketing goals and broad strategies must be established before a sales forecast is made.–Once it is made, it becomes a key controlling factor in all operational planning throughout the company.THERE ARE TWO BASIC PROCEDURES USED TO FORECAST SALES:•A “top-down” approach in which management:–Develops a forecast of economic conditions and industry trends.–Determines the market potential for a product.–Determines the sales potential for the product.–Measures the share of this market the firm is currently getting or plans to capture.–Forecasts the firm’s sales of the product.•A “bottom-up” approach in which management:–Generates estimates of future demand from customers or the company’s salespeople.–Combines the estimates to get a total forecast.–Adjusts the forecast based on managerial insights into the industry, competition, and general economic trends.PREDICTIONS OF MARKET DEMAND MAY BE BASED ON TECHNIQUES RANGING FROM UNINFORMED GUESSES TO SOPHISTICATED STATISTICAL MODELS. COMMON METHODS INCLUDE:•Market-factor analysis—demand for a product is assumed to be related to the behavior of certain sales activity.•Survey of buyer intentions—a sample of current or potential customers are asked how much of a particular product they would buy at a given price during a specified future time period.•Test marketing—a firm markets its product in a limited geographic area, measures sales, and then projects the company’s sales over a larger area.•Past sales and trend analysis—a flat percentage increase is applied to the volume achieved last year or to the average volume of the past few years.•Sales-force composite—a bottom-up method consisting of collecting estimates of sales for the future period from all salespeople.•Executive judgment—obtaining opinions regarding future sales volume from one or more executives.PREDICTIONS OF MARKET DEMAND MAY BE BASED ON TECHNIQUES RANGING FROM UNINFORMED GUESSES TO SOPHISTICATED STATISTICAL MODELS. COMMON METHODS INCLUDE:•Past sales and trend analysis—a flat percentage increase is applied to the volume achieved last year or to the average volume of the past few years.•Sales-force composite—a bottom-up method consisting of collecting estimates of sales for the future period from all salespeople.•Executive judgment—obtaining opinions regarding future sales volume from one or more