PAST-SALES ANALYSIS Firms can develop sales forecasts on the basis of past sales. Timeseries
analysis breaks past time series into four components (trend, cycle, seasonal, and erratic) and
projects them into the future. Exponential smoothing projects the next period’s sales by combining an
average of past sales and the most recent sales, giving more weight to the latter. Statistical demand
analysis measures the impact of a set of causal factors (such as income, marketing expenditures, and
price) on the sales level. Finally, econometric analysis builds sets of equations that describe a system
and statistically derives the different parameters that make up the equations statistically.