This is my second blog on understanding how to emerge as a winner in the Capsim Business Simulation. It is an online opportunity for students and entrepreneurs to understand how businesses work and how the actions are taken in one department have effects on all others. You are required to manage all the critical departments including Research & Development, marketing, production, HR, TQM, and finances to remain profitable. The objective is to improve profitability, score well on the balanced scorecard, have high market capitalization, and high market share in the industry. In this blog, we will understand how can we forecast sales for the upcoming year in the marketing department.
Role of Marketing:
The role of the marketing department is to set the prices for the product, invest in the sales and promotion budget to generate awareness and accessibility respectively, and finally make a forecast for next year's sales so that the production department can produce the required quantities of product.
Segments:
Capsim Business Simulation has various segments including traditional, high, low, size, and performance. All the segments have a definite annual demand and these annual demands grow at a fixed growth rate per year. The information about the two is available in the Capstone Courier report which is published every year in the industry.
Forecasting: The right way:
The right way to forecast your sales is to understand the annual demand of the segment in the current year and calculate the demand for the upcoming year by multiplying the current year's demand with the expected growth rate.
Once we have the total annual demand of the segment, we need to understand our expected market share. Our expected market share would be in line with our current market share. Generally, we aspire for a higher market share each year and our forecast should be:
Forecast = Current Annual Demand * ( 1+ Expected growth rate) * Expected Market share in %age.
The number of units arrived by should be your forecast for the upcoming year.
Advice:
Rather than working with a trial-and-error method and adjusting the forecast production as per the Balanced Scorecard, it is better to use this logical method of computing your forecast and sending it to the production department for production. This will ensure that you do not have unsold inventory as well as saves you from stock out situation.
It is just one aspect of Capsim Business Simulation. This tool is immersive and emerging as a winner takes more than just computation of forecast.
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