The sales forecast should originate in the demand side of the enterprise, because it is the demand side of the enterprise (sales and marketing) that is responsible for generating demand and that should have the best perspective on what future demand will be.
Sales forecasting is the basis of fund budgeting, all budgeting starts with the sales forecast. Financial planning for working capital requirements, plant expansion and other needs are based on anticipated sales.
The sales forecast differs from the company sales potential. It concentrates on what actual sales will be at a certain level of company marketing effort, whereas the company sales potential assesses what sales are possible at various levels of marketing activities.
In many companies, sales forecasting is an integral part of a critical process for matching demand and supply that is sometimes referred to as Sales and Operations Planning.
Sales forecast is the first step in many business organizations and is the core of marketing management.
Usually all other activities such as production plan, appointment of salespersons, quota setting, fixing of sales territories, price fixing, advertising and promotion programme, etc. are made after the determination of expected sales.
Definition of sales forecast
