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sales forecasting methods

Everything You Need to Know about Using the Right Sales Forecasting Methods

Sales forecasting methods are used to predict how much of a particular product is likely to be sold within a specified future period in a particular market at a specified price. Using accurate sales forecasting methods is vital for any business to be able to produce and sell the required quantity of goods at the right time. Furthermore, by helping companies to gauge the demand, sales forecasting techniques ensure better inventory management.

Why are sales forecasting methods important?

By leveraging the right sales forecasting methods that suit the business, companies can spot potential threats and demand fluctuations while there is enough time to avoid and mitigate them. For instance, if a business uses sales forecasting techniques and notices that their team is trending much below quota, it gives the business the opportunity to understand what is going wrong and undertake a corrective course of action. Discovering such problems at the early stage rather than at the end of the month or the quarter makes a huge difference to the overall sales. Sales forecasts can also be taken into consideration for a decision including hiring, resource management, goal-setting, and budgeting.

Failing to meet the forecasted goal can significantly hurt stock prices. This can be avoided by leveraging the right sales forecasting methods and strategies. Request a free proposal to know how experts at Infiniti research can help you choose the right sales forecasting methods for your business.

Factors that affect sales forecasting

Sales forecasts are often influenced by both internal and external factors of an organization. These factors can also greatly influence the sales forecasting methods chosen by companies.

sales forecasting methodsInternal factors

Changes in sales territory

If territory assignments are shuffled, boundaries are redefined, or a new sales territory management plan is introduced, there are chances of a temporary dip in sales. However, sales will bounce back to an even higher point once the company’s sales representatives adjust to their new, optimized territories.

Changes to compensation plan

If a company decides to make changes to its sales compensation plan or commission structure, it is likely to have an impact on the sales structure. For instance, if a company switches to a structure that rewards sales representatives for increasing revenue rather than closing more deals, their forecast should anticipate fewer new accounts with a focus on targeting higher-value customers.

Changes in the team size

When more sales representatives are hired, the company will expect a spike in sales as more people on the team are working to close deals. Likewise, as sales representative quit or retire there might be a dip in sales until a replacement is found.

Changes to products or services

Whenever a business introduces a new revenue stream, releases highly-anticipated features, or restructures how offerings are bundled or priced, the changes will impact their sales forecasting methods. If a new offering enables sales reps to speed up the sales cycle or increase their win-rate, for instance, the sales forecasting methods used should reflect that positive gains.

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External factors

Market competition

The decisions and actions of your competitors can affect the outcome irrespective of the sales forecasting methods used. For example, if a major competitor of a company suddenly discounts their prices, that will impact their ability to sell at the current prices.

Market changes in supply and demand

If companies don’t pay attention to the changes around them, sales forecasting methods used can become ineffective. If there’s a growing need for the company’s product or service, that’s a sign the business can be more optimistic in their sales forecast and projected growth (especially if there’s a gap in market supply).

Seasonality

Depending on what is being sold, a company’s sales might naturally rise and fall during certain times of the year. This is different than market changes, as seasonal highs and lows occur on a cyclical basis. Since seasonality is reasonably easy to predict, it should be factored into the sales forecasting methods in order to avoid skewing the results.

The rate of inflation

For long-term forecasting, in particular, potential inflation and how it will affect costs and pricing strategies need to be accounted for.

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Business Forecasting

Business Forecasting: The Challenges in Knowing the Unknown

Business forecasting undertaken by managers is prone to numerous biases and limited market knowledge. Over the past few years, various statistical tools and AI programs have assisted managers in improving their forecast accuracy. Human instincts combined with statistical tools and AI programs can help construct a reliable forecasting tool. However, many companies still follow an archaic process of quarterly forecasts, which is estimated by managers of respective units. The individual estimates are then consolidated and negotiated to match the final target. In this article, our experts unveil some of the common challenges in the business forecasting process.

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Common Challenges in the Business Forecasting Process

Estimating Forecast for New Products

Almost all forecast tools rely on historical data to predict future outcomes. The managers do not have any historical data to refer to in the case of evaluating performance for a new product. This problem is particularly evident in industries such as consumer electronics, fashion, and books, where new product introductions account for the bulk of sales. So, an error in forecasting can result in a loss of sales opportunity. To tackle such problems, companies usually resort to historical data of similar products and assortments to build a forecast.

Lack of Quantitative Analysis

Despite the availability of numerous forecasting tools and software, most managers simply ignore using quantitative analysis for their forecasts. A majority of the managers are habituated to use a simplistic approach such as linear extrapolation and also adjust the forecast techniques to align with their instincts. Currently, business forecasting is largely inaccurate as organizations lack access or expertise to use forecasting tools.

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Tackling Variance in Sales Volume

An organization’s sales figure is highly dynamic and dependent on a large number of factors such as economic, political, cultural, and legal factors. It can be challenging to accurately estimate the sales volume as such factors completely disrupt the historical pattern. Various predictive models are being developed to take inputs from multiple factors such as that enhance the process of business forecasting.

Want to gather more insights into our business forecasting services and their benefits for your business? Request for more info from our experts.

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Market Forecast and Model Development for a Neurocritical Care Client Aids in Developing a Robust Market Model

Over the past few years, neurocritical care has evolved as an individual medical specialty service that links neurology, neurosurgery, and critical care medicine for management and treatment of complex, severe, life-threatening neurological complications. The rising incidences of head trauma and stroke ailments are expected to boost the growth of the industry. Additionally, increasing advances in neurosurgical techniques are further expected to fuel the growth of the neurocritical care industry.

However, according to the market forecast specialists, the increasing number of patients across the globe preferring specialty clinics for neurocritical care and the rising demand for more critical care units may impact the growth prospects of the key market players. As a result, many players in the neurocritical care industry have started adopting market forecast and model development solutions to develop a robust market model and gain a stronger foothold in the neurocritical care market space. The market forecast solutions offered by Infiniti help neurocritical care clients to design and devise a robust market model and evaluate the impact of various scenarios that could affect the growth of the industry.IR_Brochure

The Business Challenge

A leading player in the neurocritical care space with offices spread across the globe wanted to obtain a deeper understanding of the various conditions leading to an increase in intracranial pressure (ICP), procedural penetration of ICP monitoring, and a procedural mix of various ICP monitoring modalities. The client also wanted to assess the ICP monitoring market and associate leading treatment modalities for their future growth prospects.

Our Approach and Solutions Offered

Infiniti’s market forecast specialists formulated a dashboard comprising relevant pieces of information to deliver valuable insights to the client. The dashboard included an in-depth clinical/literature database search to comprehend the treatment paradigm of individual conditions, indications of ICP monitoring, adoption trends, and penetration of ICP monitoring devices.

During the course of this market forecast engagement, the client was able to understand the distinct conditions and their contribution to the overall ICP market. Additionally, the robust market model offered by Infiniti, which included authentic financial data, helped the neurocritical care client gain an immediate acceptance among the customers and helped them devise an effective strategic plan for future growth.

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Market Forecast Engagement Benefits:

  • Gathered data to identify and mitigate risks across segments
  • Developed a robust market model and analyzed the target market
  • Devised an effective strategic plan for their future growth prospects
  • Assessed current market performance and potential opportunities across geographies

Benefits of Our Integrated Approach:

In a span of mere 14 weeks, the neurocritical care client was able to devise an effective strategic plan for their future growth across all verticals. Additionally, the client was also able to gain a comprehensive picture of the critical components to target in the market space. The market forecast engagement also helped the client increase their operational efficiency and reduce risks across various geographical locations.

A must-read case study for strategy experts and decision makers looking to develop an understanding of the neurocritical care industry.

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Customer Engagement

Control Valves Market Assessment Study in Europe, Middle East, and Africa

Business Challenge
A leading integrated engineering systems provider wanted to restructure its business approach specific to the control valves market in various geographies to achieve higher growth in the market.
Situation
The client wanted to assess the future market potential for its control valve product segment, and was looking for strategic consulting on how to reformulate its business strategies for higher growth.
Approach
We conducted a comprehensive assessment of market dynamics including demand and supply, sales projections, price and demand trends, cost drivers, value chain strategies, and end-user segment attractiveness to develop key performance indicators for insights generation.
Impact
Through our consulting services, the client was able to evaluate the critical parameters for growth in the control valve market and realign business strategies to achieve higher growth and competitive advantage.

Market Opportunity Assessment for Distributed Control Systems

Business Challenge
A leading automation solutions company wanted to assess the potential for its distributed control systems in the Chemical industry in Europe.
Situation
The client wanted to gain insights on the market dynamics, including market landscape, market size and demand situation and assess market saturation and trends to identify a potential addressable market in Europe.
Approach
We leveraged our existing database of market stakeholders and deployed our information source mapping team to identify additional contacts who could provide information specific to the distributed control systems market and conducted in-depth interviews with the shortlisted key stakeholders, followed by insights development.
Impact
The client was able to understand the challenges related to the demand and supply scenario in the market, identify the causes for saturation in demand, and identify new potential addressable markets.

Industrial Bearings Market Research Study in South America

Business Challenge
A leading bearings manufacturer in Europe wanted to understand the market potential for its products in five South American countries.
Situation
The client wanted to reformulate its business strategies by understanding the market potential for its products (such as ball bearings, roller bearings, wheel bearings, automotive bearings, and bearing units) in Latin America.
Approach
We conducted an in-depth market assessment covering market size and segmentation, value chains, potential distribution channels, and end-user segments. We also shortlisted potential end-user segments and obtained insights about their emerging requirements.
Impact
The client was able to gain an in-depth understanding of the market dynamics and critical factors such as purchase criteria and buyer preferences and requirements. It was also able to develop an understanding of the supply market to devise effective procurement strategies.
Metal Fabrication

Market Intelligence Study on Laser Tooling and Plasma Processing Market in the US and Canada

Business Challenge
A leading laser tooling and plasma processing services provider wanted to leverage the emerging opportunities in North America.
Situation
The client wanted complete analysis of the market in North America, including market demand, trends, key growth drivers, and major customer segments to understand and leverage the latest opportunities.
Approach
We conducted extensive primary and secondary research in the US and Canada through our proprietary contact databases, to assess the market growth, evaluate the major market trends, and identify the most attractive market segments.
Impact
The client was able to gain geography-specific insights, which helped in evaluating the appeal and attractiveness of the markets in the US and Canada and identifying the segment with the highest growth potential.

Market Intelligence on Endocrinology Drugs Market in the EMEA Region

Business Challenge
A global endocrinology therapeutics major was interested in ascertaining the size of the market for endocrinology drugs and also on determining the region-wise potential for these drugs.
Situation
The client wanted to conduct a growth assessment for 25 countries in the EMEA region to determine the regions it should focus on for aggressive growth.
Approach
We conducted 100+ primary interviews and exhaustive secondary research, followed by a comprehensive sectorial analysis of the market. We also provided market trend and growth and profit forecasts for a 5-year outlook period.
Impact
The strategic insights helped the client identify the market segments with the highest growth potential, and also to choose a geography to focus its marketing and growth strategies on.

Market and Competitive Analysis of Building Insulation Market in the UK

Business Challenge
A leading building insulation products and services provider wanted to leverage the emerging opportunities in the UK to gain higher market share and competitive advantage.
Situation
The Building Insulation Products market in the UK was undergoing a phase of substantial growth and the client wanted to leverage the opportunities to obtain a stronger grip on the market with better sales volumes and market share.
Approach
We conducted an in-depth assessment of the market forecast, trends, and drivers for various segments of the Insulation market, followed by an analysis of the leading players in the UK for insulation products and services to understand the competitive landscape.
Impact
The client used our market information to realign its sales force and aggressively target the markets with high demand for insulation products for roof cavity, wall cavity, structural, industrial purposes industries, and increase its revenue share from different segments.

Analysis of MRI Systems Market in the US

Business Challenge
A leading medical devices manufacturer in Europe wanted to identify the potential for its magnetic imaging resonance (MRI) systems in the US.
Situation
The client wanted to obtain a comprehensive understanding of the growth drivers, trends, and leading competitors in the MRI Systems market in the US, and also to ascertain the market size in terms of value and volume (both current and forecast).
Approach
We conducted interviews and discussions with market stakeholders to facilitate in-depth assessments of the competitive environment and potential opportunities.
Impact
Based on our insights, the client gained a detailed understanding of the market’s demographics and competitive environment. Moreover, the company developed a detailed understanding of the market opportunities for its product offerings.
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