Question

Which of the following statements BEST defines the relationship between sales forecasts and sales potentials?

1) The term sales forecast is synonymous with the term sales potential
2) The sales forecast reflects what the company could sell in a territory if conditions were ideal; the sales potential estimate is an estimate of potential sales that are calculated under the assumption that market conditions are never ideal
3) Sales potential estimates are always determined for a particular product; sales forecasts are always determined for particular territories
4) Sales potential is the portion of the market potential a specific firm can reasonably expect to achieve; sales forecasts are estimates of the dollar or unit sales for a specified future period under a proposed marketing plan
5) Sales forecasts are typically higher than sales potential estimates.

Answer 1

The best definition of the relationship between sales forecasts and sales potentials is that sales potential is the achievable market share under ideal conditions, while sales forecasts are the expected sales based on actual market conditions and marketing plans. Sales predictions for day 60 and day 90 using the given model are $250.12k and $324.52k respectively.

The relationship between sales forecasts and sales potentials can be succinctly described by one of the given statements. The best definition is statement 4: Sales potential is the portion of the market potential a specific firm can reasonably expect to achieve; sales forecasts are estimates of the dollar or unit sales for a specified future period under a proposed marketing plan. This statement accurately distinguishes the two concepts, with sales potential referring to the market share a company could achieve under ideal conditions, and sales forecast indicating the actual expected sales based on current market conditions and specific marketing efforts.

As for the prediction question using the given model ŷ = 101.32 + 2.48x, where x is the day and ŷ is the sales in thousands:

• To predict the sales on day 60, substitute x with 60: ŷ = 101.32 + 2.48(60) = 101.32 + 148.8 = 250.12 thousand dollars.
• To predict the sales on day 90, substitute x with 90: ŷ = 101.32 + 2.48(90) = 101.32 + 223.2 = 324.52 thousand dollars.