FORECAST PREDICTION FOR FUTURE PERIOD

WHY SALES FORECAST 1 Planning for Production Capacity

2 Finance for Raising Cash for investments and operations
3 Planning for Purchasing Function
4 Human resource management for Manpower Planning

Market Potential It is the best possible(or maximum) estimated sales of a give

the entire industry in a given market for a specific period o
Industry sales forecast

Sales Potential It is the best possible(or Maximum)estimated sales of a given

company in a given geographic area for a specified

Product Category

Volume
in Crores Volume in Explain here where is the Market po
Example Category FY 17-18 Brand Crores Company Potential figur
1 Noodles 2500 Maggi 1250
Top Ramen 250
Yippie 400
local 600

New Delhi: Nestle India Ltd on Tuesday said Maggi noodles has regained 50% share in India’s Rs.2,000-crore noo
months after it relaunched the popular snack. The company has based its claim on a report by market resear
 The local arm of the Swiss packaged food company relaunched Maggi noodles on 9 November. Nestle India was n
noodles for six months in 2015 after the Food Safety and Standards Authority of India on 5 June imposed a ban afte
snack were allegedly found to contain excess lead and monosodium glutamate.

“Over the past 33 years, Maggi has become the most trusted and valuable food brand in India. I am also happy that w
month on month and we continue to lead the noodles category with over 50% market share,” Suresh Narayanan, ch
managing director, Nestle India, said in a statement.
 Maggi masala noodles were relaunched in November 2015 and the chicken variant in February. Nestle India is no
popular variants—Maggi vegetable atta and Maggi oats noodles. Like the two previous launches, Nestle India wil
variants of Maggi on Snapdeal as a preview sale starting 22 April.

“We understand the changing lifestyles of generations and have constantly innovated products that add value to t
Noodles. With the latest relaunch, we are aiming to provide more choices to suit consumer preferences, driving greate
back our market share. We are hopeful that these two variants will also have a rapid pick-up like the masala and ch
Narayanan.
Narayanan had spelled out his intention to reduce dependence on Maggi noodles, which accounted for about 30% of
2014, immediately after he came to India as the chairman and managing director of the company in July last

To be sure, Maggi’s market share was much higher before the ban. According to a report by Nomura Financial Ad
Securities (India) Pvt. Ltd, published in May 2015, Maggi commanded 80.2% of the market for instant noodles in th
March 2015. During the period when sale of Maggi noodles was banned, ITC Ltd’s Yippee noodles and Wai Wai n
Nepal’s CG Foods gained market share filling the void created by the absence of Nestle India’s Maggi from the mark
Ramdev’s Patanjali Ayurveda also joined the race for a share of the market by launching atta noodles.
The ban hurt Nestle India’s revenue in three consecutive quarters. “The company faced an unusual situation with Ma
that impacted its operations during the 2nd, 3rd and 4th quarters. The results for the year and for the 4th quarter
December 2015 are not fully comparable with the results of the previous corresponding periods,” Nestle India sa
company’s annual earnings statement.

For the 12 months ended 31 December, Nestle’s net profit fell 52% to Rs.563.27 crore.

“There’s still room for growth. The company is launching more variants which will help in gaining market share. In
term, it is likely to cross 60%, but is unlikely to reach the level where it was before the ban. Competition has picked u
during the absence of Maggi noodles in the market,” said Abneesh Roy, an analyst with Edelweiss Securit
 investments and operations as well as for profit Planning

nt for Manpower Planning

um) estimated sales of a given product or service for

market for a specific period of time.It is also called
ndustry sales forecast

um)estimated sales of a given product or sevice for a

ographic area for a specified period of time

here where is the Market potential Figure and sales

Potential figure

India’s Rs.2,000-crore noodles market, about six

on a report by market researcher Nielsen.
vember. Nestle India was not able to sell Maggi
n 5 June imposed a ban after some samples of the
osodium glutamate.

dia. I am also happy that we have gained

are,” Suresh Narayanan, chairman and
t.
February. Nestle India is now bringing back the
launches, Nestle India will launch the two new
ting 22 April.

products that add value to the favourite Maggi

preferences, driving greater volumes and building
k-up like the masala and chicken variants,” said
 ccounted for about 30% of total sales in
of the company in July last year.

rt by Nomura Financial Advisory and

ket for instant noodles in the quarter to
pee noodles and Wai Wai noodles from
dia’s Maggi from the market. Yoga guru
by launching atta noodles.
n unusual situation with Maggi Noodles
ear and for the 4th quarter ended 31
ng periods,” Nestle India said in the

o Rs.563.27 crore.

in gaining market share. In the longer

n. Competition has picked up really well
yst with Edelweiss Securities.
 1 All(Total Sales)
2 Industry Sales
3 Company Sales
4 Product Line Sales
Produc Variant
Product level 5 (Form) Sales
6 Product item Sales

Types of Sales Forecast

1 Long term
Time Period 2 Medium Term
3 Short Term

Geographic Area 1 Nation

2 Region
3 Territory
4 Customer
All(Total Sales)
Industry Sales
Company Sales
Product Line Sales
Produc Variant
(Form) Sales
Product item Sales

Long term
Medium Term
Short Term

India
North india
Rohtak District
A Top -Down /Break down approach

Forecast Relevant External Environmental Factors over

specified period of time

Delphi Method
Forecast Industry sales

Compan y Sales Potential=Industry sales forecast*Company's

Share of total industry sales in percentage

Company Sales forecast of the Product/Service

Sales/Marketing Managers Forecasts for Approaches Multiple-Factor Index Method

Region,Branches,Territories and Customers

Example: Product
Noodles
Place

Multiple-Factor Index for Bangalor

Industry sales forecast

Market Potential for Noodles in

Bangalore

B Bottom Up/Build UP Forecasting

Approach
 Combined into Company sales forecast

Combined into Regional /Zonal Sales

Forecast

combined into Area/Branch Sales

Forecast

Sales person's Sales Forecast of Individual

customers
 Market potential 2500

Sales potential

e-Factor Index Method

weight Total
Personal
Population Income Retail sales
Weight 0.4 0.3 0.3 1
Bangalore 0.7 1.0 1.0

actor Index for Bangalore 0.88

2500 cr

Potential for Noodles in 22

Bangalore
 This method includes getting the
Executive opinion method views of top executives of the
company regarding the future
sales.This is done by either taking the
averages of all the executives or
through discussions among the
executives.Some are supported by
forecasting methods and some arrive
at opinion based on
A judgement,experience and intitution
B Delphi method
C Sales force Composite Method
D Survey of Buyer's intention Method
Full blown Test Markets
E Test Marketing Methods Controlled Test Marketing
Simulated Test Marketing

F MOVING AVERAGE METHOD

EXAMPLE IN MILLIONS
YEAR ACTUAL SALES
1997 840
1998 880
1999 864
2000 832
2001 862
2002 948
2003 956
2004(FORECAST)
sales forecast for next year
Actual sales for past 3 or 6 years/no of year(3
F NAÏVE RATIO METHOD
Sales forecast for next year (Actual sales of this year/actual sales of last year)*A
of this year

2004 964.1

G EXPONENTIAL SOOTHING METHOD

Sales forecast for year= (L)(Actual sales current year)+(1-L)(forcasted sales

L=SMOOTHING CONSTANT

L with a high value 0f 0.7 or 0.8 allows most recent periods of actual sales
to influence sales forecast more than sales of earlier periods whereas a
soothing constant of 0.2 or 0.3 allows earlier periods to influence forcasted
sales. L can range from from some thing greater than 0 and less than 1

Sales forecast for 2004 896

wn Test Markets
d Test Marketing
d Test Marketing

3 YEAR MA 6 YEAR MA

861
859
853
881 871
922 890
or 6 years/no of year(3 or 6)
tual sales of last year)*Actual sales
this year

)+(1-L)(forcasted sales of current year)

941
Seasonal Factor (Or Index)

A seasonal factor is the amount of correction needed in a time series to adjust for the season of
amount sold during each season divided by the ave
The following examples show how seasonal indices are determined and used to forecast.

Assume that in the past years, a firm sold an average of 1000 units of air conditioners each year. On the average, 200 un
September and 150 in October to December. Calculate the seasonal indices for each season (quarter). If the expected dem

Average sales
QUARTER PAST SALES per season Seasonal Factors
JAN-MARCH 200 250
APRIL-JUNE 350 225
JULY-SEPT 200 225
OCT- DEC 250 225
TOTAL 1000

Expected Demand for next Year

Average sales
QUARTER EXPECTED SALES per season Seasonal Factor
JAN-MARCH 240 300 0.8
APRIL-JUNE 466.66666666667 300 1.6
JULY-SEPT 266.66666666667 300 0.9
OCT-NOV 333.33333333333 300 1.1
TOTAL 1200
e series to adjust for the season of the year. Basically, the seasonal factor (or index) is the ratio of the
ring each season divided by the average for all seasons.

nditioners each year. On the average, 200 units were sold from the period January to March, 350 in April to June, 300 in July to
or each season (quarter). If the expected demand for the next year is believed to be 1100, forecast the demand in each quarter

Factor
0.8
1.6
0.9
1.1
s the ratio of the

une, 300 in July to

nd in each quarter
 This method includes getting the
Executive opinion method views of top executives of the
company regarding the future
sales.This is done by either taking the
averages of all the executives or
through discussions among the
executives.Some are supported by
forecasting methods and some arrive
at opinion based on
A judgement,experience and intitution
B Delphi method
C Sales force Composite Method
D Survey of Buyer's intention Method
Full blown Test Markets
E Test Marketing Methods Controlled Test Marketing
Simulated Test Marketing

F MOVING AVERAGE METHOD

EXAMPLE IN MILLIONS
YEAR ACTUAL SALES
2001 200
2002 300
2003 1600
2004 1800
2005 1900
2006 1950
2007 2000
2008 2200
2009 2500
2010 2700
2011
F NAÏVE RATIO METHOD
Sales forecast for next year (Actual sales of this year/actual sales of last year)*A
of this year

2004

G EXPONENTIAL SOOTHING METHOD

Sales forecast for year= (L)(Actual sales current year)+(1-L)(forcasted sales

L=SOOTHING CONSTANT

L with a high value 0f 0.7 or 0.8 allows most recent periods of actual sales
to influence sales forecast more than sales of earlier periods whereas a
soothing constant of 0.2 or 0.3 allows earlier periods to influence forcasted
sales. L can range from from some thing greater than 0 and less than 1

Sales forecast for 2010

wn Test Markets
d Test Marketing
d Test Marketing

3 YEAR MA 6 YEAR MA

l 0.1 0.2 0.3

tual sales of last year)*Actual sales
this year

)+(1-L)(forcasted sales of current year)

941