SALES BUDGET

Sales BudgetSales Budget• A budget of company sales during a A budget of company sales during a

period in the future (detailly)period in the future (detailly)• Part of company sales planningPart of company sales planning• Consist of (usually) :Consist of (usually) :

– type of product (quality)type of product (quality)– quantityquantity– unit priceunit price– sales timesales time– placeplace

Company Sales Planning

• Marketing goals : maximal return, market penetration, market development, market share, launch new product, etc

• Sales organization (number of team, branches, etc)

• Channel distribution (wholesaler, agent, etc)• Promotion medias (above the line (printing or

not) and below the line)• Product research and developmnet (innovation)

• A sales budget shows expected sales in units at their expected selling prices

• A sales budget is the cornerstone of budget preparation because a firm can complete the plan for other activities only after it identifies the expected sales level

Sales Budget Influenced By Some Factors :

• Internal Factors : Previous sales, marketing and sales policies, production capacity, capital, etc controllable

• External factors : competitiveness, demography, religion/norms or belief, economic condition, etc un-controllable

A company prepares the sales budget for a period usually based on the forecasted sales level

How to forecast the sales level

Non-statistical MethodNon-statistical Method(relatively SUBJECTIVE)(relatively SUBJECTIVE)

Opini / judment methodOpini / judment method Executive opinion, salesman opinion, consultant Executive opinion, salesman opinion, consultant

opinion, etcopinion, etc Delphi techniqueDelphi technique

Opinion of panel expertOpinion of panel expert

Statistical MethodStatistical Method(more OBJECTIVE)(more OBJECTIVE)

One variable (sales only)One variable (sales only) Free hand methodFree hand method Semi-average methodSemi-average method Moment methodMoment method Least square methodLeast square method Parabolic methodParabolic method

Statistical MethodStatistical Method(more OBJECTIVE)(more OBJECTIVE)

One variable (sales only)One variable (sales only) Free hand methodFree hand method Semi-average methodSemi-average method Moment methodMoment method Least square methodLeast square method Parabolic methodParabolic method

Statistical Method 2Statistical Method 2(more OBJECTIVE)(more OBJECTIVE)

Two variable or more (sales with adverstising Two variable or more (sales with adverstising and else)and else)

There are : variable independent(s) and There are : variable independent(s) and dependent variabledependent variable Linier regression (simple)Linier regression (simple) Multiple regressionMultiple regression

Statistical Method 3Statistical Method 3(more OBJECTIVE)(more OBJECTIVE)

Specific AnalysisSpecific Analysis Industrial analysis or market share analysis Industrial analysis or market share analysis

(TOWS matrix)(TOWS matrix) Product-line analysisProduct-line analysis End user analysisEnd user analysis

Sales Budget Form

Sale Forecast April May June Quarter

Sales in units 20,000 25,000 35,000 80,000

Selling price

per unit x $30 x $30 x $30 x $30

Total sales $600,000 $750,000 $1,050,000 $2,400,000

Kerry Industrial Products CompanySales Budget

For the First Quarter Ended June 30, 2007