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Sales forecast and demand forecast

Former Member
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Hello Friends

What is the difference between sales forecast and demand forecast ?

Regards

RK

Accepted Solutions (0)

Answers (4)

Answers (4)

Former Member
0 Kudos

Rakesh,

Expanding on Senthil's comments, sales forecast is usually a high level forecast or expectation of revenue. In other words, what is the expected level of revenue for your organisation within the time frame in question. Statements like, "we expect to grow 3% per year for the next three years" is typically a sales forecast. Another important point is that it may or may not be based on extensive market analysis. Sometimes is just a condition on a broader business plan and as such is Top-Down.

Demand forecast, is based on waht the market is expected to buy from you, your competitiors and other potential replacement products. It is based on market analysis and initially is done independently from the sales forecast (bottom-up). ON subsequent interactions within the management team, the demand forecast will provide the argumentation, SWOT analysis and so on to establish the necessary strategies to realise the sales forecast.

On an ideal scenario, both start on their own but converge throughout the process of setting the mid-long term strategy for the business.

I hope this adds more colour to your request.

Please let us know if this is what you're after.

Cheers,

Rodrigo

Former Member
0 Kudos

Rakesh,

Expanding on Senthil's comments, sales forecast is usually a high level forecast or expectation of revenue. In other words, what is the expected level of revenue for your organisation within the time frame in question. Statements like, "we expect to grow 3% per year for the next three years" is typically a sales forecast. Another important point is that it may or may not be based on extensive market analysis. Sometimes is just a condition on a broader business plan and as such is Top-Down.

Demand forecast, is based on waht the market is expected to buy from you, your competitiors and other potential replacement products. It is based on market analysis and initially is done independently from the sales forecast (bottom-up). ON subsequent interactions within the management team, the demand forecast will provide the argumentation, SWOT analysis and so on to establish the necessary strategies to realise the sales forecast.

On an ideal scenario, both start on their own but converge throughout the process of setting the mid-long term strategy for the business.

I hope this adds more colour to your request.

Please let us know if this is what you're after.

Cheers,

Rodrigo

Former Member
0 Kudos

Hi! rakesh,

There is no diffrence between Sales forecast & demand forecast .

Forecast is nothing but forecasted future sales.

In an organisation the use of DP is only to forecast how much will be future sales which is the base on which all procurement & production planning happens.

Regards

Vaibhav Sareen

Former Member
0 Kudos

Hi Rakesh,

Sales forecast is the forecast actually made by the sales based

on the company's current position based on its budget, current

financial situation, current profit margin etc., which will be

decided by sales team and sales team management personnel

which will be fixed and forecast will be made accordingly

Demand forecast is the forecast that is actually needed by

the customer or by market. ie It will reflect the actual

demand situation in the market.

Both sales forecast and demand forecast may or may not be

same for a typical condition. In general, sales forecast can

be adjusted to reduce or exceed the demand forecast based

on the performance of the company.

Hope it is clear now.

Regards

R. Senthil Mareeswaran.