Today we will talk about What is a quantitative and qualitative sales forecasting method and what types are there? Before getting into the subject, we must know What is a forecast? is the prediction of an event, within a certain set. They have great use in companies, clarifying the insecurities that are had when making decisions, which can affect the business. Despite not being more decisive than the decision of the administrative part, it makes it easier to visualize the panorama.
These forecasts are used by different areas, adapting the forecast predictions in their department, in order to have reference, knowing where they should go in making decisions, making the work of the highest parts of the business structure easier. It is also quite important for a company to know where the sales are going, because with this, it is achieved that part of the business plan must be modified, this depending on the market.
Knowing what a sales forecast is and how important it is, now we will talk about qualitative and quantitative sales forecasting methods, showing the types that exist. Next, then we will mention and explain some types of sales forecasting methods that exist.
What is a qualitative sales forecasting method and what types are there?
Before looking at qualitative sales forecasts, we must know what they are. A qualitative forecast is the which is based on opinions and assumptions, said by professionals in the area of the industry. Qualitative sales forecasting methods have several types, which we will mention and explain below.
- Grassroots forecast: This type of forecast is based on ask for purchase patterns, to people who are close to final consumers, such as sales personnel. Being they who know better the pattern of purchases, of the clientele
- Delphi method: This type of forecast, takes into account the decisions made by specific people, which must be professionals in the area they handle. By having all these opinions, they are averaged as if it were one, giving a more general view of the criticisms.
What is a quantitative sales forecasting method and what types are there?
We have already seen what a qualitative forecasting method was, based on opinions and assumptions. But now what is a quantitative sales forecasting method? It is which, instead of using people’s opinions, it goes on the mathematical side, analyzing the sales results that a company has.
For this method, past business records are taken into account, this in order to give a more effective forecast. In the following, we will mention and explain some of these quantitative sales forecasting methods.
- Simple linear regression method: With this method, a variable that is dependent on demand is grouped through a linear equation. It can be graphed, putting the sales data in a graph, and then passing a line that connects to the future.
- Run Rate Method: It is an easy method to calculate sales, which is based on how many were the previous year. It is possible to calculate, by averaging between, the total income to date, and the total sales of past months. It can be useful to forecast earnings at a specific time, making it known whether or not the proposed goal will be reached.
- Simple moving average model method: This sales forecast method consists of making an average between previous data, obtaining the forecast for next year. Serves better if there is not a big change in the market.
Each of these methods has its positive and negative sides, but it is already a matter for each company, to use the one that best serves their current business plan. Because each method may be more helpful in certain situations. We hope this article on What is a quantitative and qualitative sales forecasting method and what types are there?