Factors governing Promotion-mix

1. Nature of product
Different types of products require different promotion mix. In
case of consumer goods, advertisement is considered to be the
most important because the goods are non-technical and produced
on a large scale. But for industrial goods personal selling is
regarded as the most important tool because the products are
technical in nature, costly and persuasion is considered essential
for their sale.
2. Type of the market
If the number of customers is quite large and they are spread
over a vast area, advertisement is more helpful because it can
reach people everywhere. However if number of customers is
not very large and they are concentrated geographically, personal
selling and sales promotion may be more effective.
3. Stage of the product life cycle
The promotional mix depends upon the stage of the product in
product life cycle. During introduction, heavy expenditure is
incurred on advertisement followed by personal selling and sales
promotion. During the growth stage, customers are aware of the
benefits of product. Hence advertisement alongwith personal
selling will be more effective. At the maturity stage, competition
is more intense. Sales promotion becomes the most important
tool to boost sales.
4. Budget
Funds available for promotion also decide promotion mix, e.g.
advertisement is a costly tool. If sufficient funds are not available
this tool may not be adopted. Personal selling involves continuous
spending. Thus, budget is a deciding factor for promotion-mix.
5. Push vs. Pull Strategy
When the firm pushes the product to the middlemen they in turn
push it to the consumers, it is known as ‘push’ strategy. In this
case, personal selling or display should be more effective.
Pull strategy refers to the policy of a company to strive to build up
consumer demand without recourse to middlemen. Generally advertising
is considered more important in case of pull strategy.
To sum up, it may be said that all promotional tools are complementary
and not competitive. The degree of emphasis on each tools will differ
depending upon the influence of certain factors. A proper combination
of promotional tools should be designed to attain better results.
Methods for forecasting sales

Sales forecasting is especially difficult when you don’t have any previous sales history to guide
you, as is the case when you’re working on preparing cash flow projections as part of writing a
business plan. Here, Terry Elliott provides a detailed explanation of how to do sales forecasting.
–Ed.

There are all sorts of ways to estimate sales revenues for the purposes of sales forecasting.

One point to remember when sales forecasting is that if you plan to work with a bank for
financing, you will want to do multiple estimates so as to have more confidence in the sales
forecast. How do you do this?

Sales Forecasting Method #1

For your type of business, what is the average sales volume per square foot for similar stores in
similar locations and similar size? This isn't the final answer for adequate sales forecasting, since
a new business won't hit that target for perhaps a year. But this approach is far more scientific
than a general 2 percent figure based on household incomes.

Sales Forecasting Method #2

For your specific location, how many households needing your goods live within say, one mile?
How much will they spend on these items annually, and what percentage of their spending will
you get, compared to competitors? Do the same for within five miles (with lower sales forecast
figures). (Use distances that make sense for your location.)

Sales Forecasting Method #3

If you offer say, three types of goods plus two types of extra cost services, estimate sales
revenues for each of the five product/service lines. Make an estimate of where you think you'll
be in six months (such as "we should be selling five of these items a day, plus three of these, plus
two of these.") and calculate the gross sales per day. Then multiply by 30 for the month.

Now scale proportionately from month one to month six; that is, build up from no sales (or few
sales) to your six month sales level. Now carry it out from months six through 12 for a complete
annual sales forecast.

Methods for sales forecasting:

Modern Managers have several different methods available for Sales Forecasting.

Popular methods are:

1. Jury of Executive Opinion Method

Jury of Executive Opinion Method:

In the Jury of executive opinion method of Sales Forecasting, appropriate managers within the
organization assemble to discuss their opinions on what will happen to sales in the future.

Since these discussion sessions usually resolve around hunches or experienced guesses, the
resulting forecast is a blend of informed opinions.

A similar, forecasting method, which has been developed recently is called the DELPHI Method.
Delphi Method also gathers, evaluates, and summarizes expert opinions as the basis for a
forecast, but the procedure is more formal than that for the jury of executive opinion method.

The Delphi Method has the following steps:

1. STEP 1 – Various Experts are asked to answer, independently and in writing, a  series of
questions about the future of sales or whatever other area is being forecasted.                    
2. STEP 2 – A summary of all the answers is then prepared. No expert knows, how any
other expert answered the questions.       
3. STEP 3 – Copies of summary are given to the individual experts with the request that
they modify their original answers if they think it necessary.                                              
4. STEP 4 – Another summary is made of these modifications, and copies again are
distributed to the experts. This time,however, expert opinions that deviate significantly
from the norm must be justified in writing.                                                                          
5. STEP 5 – A third summary is made of the opinions and justifications, and copies are once
again distributed to the experts. Justification in writing for all answers is now required.   
6. STEP 6 – The forecast is generated from all of the opinions and justifications that arise
from step 5.

SALES FORCE ESTIMATION METHOD:

The Sales Force Method is a sales forecasting technique that predicts future sales by analyzing
the opinions of sales people as a group.

Salespeople continually interact with customers, and from this interaction they usually develop a
knack for predicting future sales.

As with the jury of executive opinion method, the resulting forecast normally is a blend of the
informed views of the group.

The sales force estimation method is considered very valuable management tool and is
commonly used in business and industry throughout the world.
This method can be further improved by providing sales people with sufficient time to forecast
and offering incentives for accurate forecasts.

Companies can make their sales people better forecasters, by training them to better interpret
their interactions with the customers.

TIME SERIES ANALYSIS METHOD:

The time series analysis method predicts the future sales by analyzing the historical relationship
between sales and time.

Although the actual number of years included in a time series analysis will vary from company
to company, as a general rule, managers should include as many years as possible to ensure that
important sales trends do not get undetected.

Other complex sales forecasting methods include:

 Statistical Correlation Method