Discuss judgemental method of sales forecasting.

Ans.

Judgemental Methods of Sales Forecasting

Judgemental methods are those methods which consider factors that simply cannot be quantified and sales forecast is based mainly on the judgement of different individuals. These methods make wider use of expertise. The principal judgemental methods can be explained as under:

1. Executive Opinion or Executive Judgement or Jury Method: It is the oldest method sales forecasting. Under this method a panel or jury or committee of high ranking executives provide an estimate of future sales. A collective decision is taken.

Merits: Following are the merits of this method of sales forecasting:

(1) Under this method quick sales forecasting is possible as this method is easy and simple.

(ii) Elaborate statistics are not needed because forecast is based on experience.

(iii) It is a feasible approach to forecasting if the firm is too young to use other techniques of sales forecasting.

(iv) The jury method can be used when adequate sales and market statistics are missing.

(v) This method is economical also.

Demerits: These can be listed as under:

(i) This technique adds to the work load of key executives. Their valuable time is consumed for making estimates of sales.

(ii) The accuracy cannot be claimed.

(iii) Findings under this method are based on opinions of the executive and factual evidence supporting the forecast is often doubtful.

2. Experts’ Opinions : Under this technique, business firm collects opinions from the outsider specialists. Wholesalers, retailers, distributors, professionals etc. express their opinions in seminars, journals etc. These opinions help in forecasting.

Merits: These are as under:

(i) This method is suitable if sale records are not available.

(ii) Sales forecasting can be made speedily and easily.

(iii) Forecasts are near to accurate.

(iv) Organisation does not spend on surveys. Thus it is much economical method.

Demerits: These are as under:

(i) The reliability is always doubtful as forecasting is not based on facts.

(ii) Market segmentation cannot be made on the basis of product or territory.

3. Sales Force Composite Method: Individual sales personnel forecast sales for their respective territories, then these forecasts are aggregated. Under this technique it is assumed that individual sales estimates are for their respective territories.

Merits: These are as under:

(i) This method imposes greater confidence in sales force as they are the key persons in sales forecasting.

(ii) Forecasts developed by this method are easy to break down according to products, territories, customers, middlemen etc.

(iii) The sales people cannot oppose to sales quotas because quotas are based on sales forecasts made by themselves.

(iv) The results are near to accurate.

(v) The firm utilises the specialised knowledge of those sales persons who are in closest touch with market.

Demerits: These are as under:

(i) Under this method of sales forecasting accuracy of sales forecasts is doubtful.

(ii) Sales persons are oftenly not aware of change taking place in the economy.

(iii) Sales persons can intentionally underestimate the demand.

4. Buyers’ Intention Survey Method: Users of the firm’s product are contracted and they are asked to file the estimated quantities, they expect to buy in a given future. Sales forecast is then made by combining the responses.

Merits: Merits of buyers’ intention survey technique are as under:

(i) This method of sales forecasting is more suitable if new product is to be introduced in the new market.

(ii) This method is economic.

(iii) This method is most suitable for short term sales forecasting.

Demerits: These are as under:

(i) If number of customers are numerous, this method is impracticable.

(ii) Buying plan can change rapidly.

5. Market Test Method: If the product is quite new and good estimators are not available, firm will introduce its product in a part of the market segment and will make the assessment of sales for the whole segment.

Merits: These are as under:

(i) Sales forecasts are more reliable as they are based on actual results.

(ii) The defect in the product come in the notice of the sales persons.

(iii) Market test method is most suitable if a new product is introduced in the country.

Demerits: These are as under:

(i) It takes long time,

(ii) Sales forecasting is based on the basis of results of a part of segment.