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marketing 4.3 - Coggle Diagram

- - - - seasonal variation : regular and repeated variations that occur in sales data within a period of 12 months or less
      - it allows the identification od underlying factors that are expected to influence future sales
        
        this technique smooths out the fluctuations in time series data and allow managers to identify the trend more easily
      - cyclical variation : variations in sales occurring over periods of time of much more than a year, they are related to the business cycle
      - random variation: may occur at any time and will cause unusual and unpredicted sales figures
      - trends
      - forecasting using the moving average method
        
        plot the trend (moving average) results on a time series graph
        
        extrapolate this into the future- short term extrapolations are likely to be the most accurate
        
        read off the forecast trend result from the graph for the period under review
        
        adjust this by the average seasonal variation for quarter 2
        
        benefits
        
        useful for identifying and applying the seasonal variation to trend forecasts
        
        reasonably accurate for short term forecasts in stable economic conditions
        
        indentifies the average seasonal variations for each time period and this can assist in planning resources- such as temporary workforce- for each quarter in future
        
        limitations
        
        fairly complex calculation
        
        forecatsts further than 1-2 years into the future become less accurate as the projections made are entirely based on post data- no consideration is taken of qualitative factors such as economists view that the economy may go into recession
        
        therefore forecasting for the longer term may require the use of more qualitative methods that are less dependent on past results
        
        newly or recent established businesses will have insufficient data to base moving averages on- other methods of sales forecasting will be needed, possibly based on market research
    - - widely used technique as it is often employed when forecasting from quarterly data
      - macro economic data is released quarterly but if it is collected monthly sales then a 12-period moving total can be used
      - trend: underlying movement of the data in a time series