TURNING CUSTOMER INFORMATION INTO SALES KNOWLEDGE

It is of utmost importance that firms (trying to sell its products and/or services in the market ) while
forecasting demand for their products keep in mind that accuracy of the forecast is taken care of. If the
demand is overestimated, the company may end up investing in additional resources, manufacturing and
distribution assets and also in inventory holding cost which it can avoid if forecasting is done more
accurately.

On the other hand, understatement of the demand is also as devastating as the overestimation of
demand. A failure inaccurate depiction of sales forecast for the product, might lead to a company not be
able to supply the required quantity of its products in the market for its end users. This ultimately opens
up market opportunities for the competitors to steal the market share of the firm with the “copycat
products”.

KNOWLEDGE GENERATED BY FIRM'S SALESFORCE

One of the most important goals for the organization (defined as the ability to gather, analyze, and utilize
customer knowledge effectively at the organizational level) is the Customer knowledge competence. This
involves a process known as the CDI (Customer Data Integration) - the technical process of gathering data
and making it useful and available across different levels of the firm. Following are the steps for the same

1. Acquire data
2. Integrate Data (put to a usable format- cleaning the data and making it accurate is also
important)
3. Make the data available to the decision-maker(s)
4. Formulate a strategy- (include- sales forecasting, determining pricing strategies, looking for new
products opportunities, etc.)

HOW IS THE GENERATED DATA USED BY FIRMS IN DIFFERENT AREAS-

 MANUFACTURING- salespeople’s forecasts are important inputs for determining number of units
of the products the firms should make
 PRODUCT DEVELOPMENT- recommendations about new products development, different
feature combinations and even- stripped-down versions of existing products to the product
developers are provided by salespeople
 FINANCE AND ACCOUNTING- to make competitive credit policies which ultimately affects the
sales of the firm
 MARKETING- salespeople have an important role to play in the before and after of the marketing
campaigns in determining the success of that particular marketing campaigns
  SALES MANAGEMENT- Sales managers seek information like which products should be more
emphasized, whether to go for a push for a price cut in product enhancement, the number of
salespeople required.

SALES FORECASTING

Sales forecasts are a function of a no. of estimates- what consumers’ demand for products, how much a
firm can produce and sell at certain prices, how competitors and customers will respond to those prices
etc.

The first estimate often made by a company is market potential (expected industry-wise sales)- often
done through research companies.

Estimating the market potential involves taking into account the factors like economic factors, technology,
and availability of substitute products, etc. - helps in estimating the market potential of a particular
product.

FORECASTING METHODS

1. Time-series techniques
 Trend analysis
 Naïve forecast
 Correlation analysis
2. Consumer spending correlates
3. Business spending correlates
4. Response models
5. Market tests
6. Judgment techniques
7. Executive opinion
8. Expert opinion
9. Customer and channel survey

Limitations of Forecasting

1. Data quality
2. Rapid change
3. Length of the horizon
4. Time and cost