SALES PLANNING COMPARED WITH FORECASTING
Sales Planning and forecasting often are confused. Although related, they have distinctly different purposes.A forecast is not a plan; rather it is a statement and/or a quantified assessment of future conditions about a particular subject (e.g., sales revenue based on one or more explicit assumptions. A forecast should always state the assumptions upon which it is based. A forecast should be viewed as only one input into the development of a sales plan. The management of a company may accept, or reject the forecast. In contrast, a sales plan incorporates management decisions that are based on the forecast, other inputs, and management judgments about such related items as sales volume, prices, sales efforts, production, and financing
A sales forecast is converted to a sales plan when management has brought to bear management judgment, planned strategies, commitment resources, and the managerial commitment to aggressive actions to attain the sale goals. In contrast, sales forecasting is a technical staff function. For example, Tennessee Gas Transmission in its 1986 brochure, "Tradition and Tomorrow," stated:
Market Planning & Analysis-As an analyst in this department, you'll prepare,using sophisticated computer modelling tools, 6-to 18-month forecasts based on the latest market information and trend; perform long-term gas market research based on economic and competitive analyses; and develop in-depth reports for national and state agencies and TGT senior management.
It is important to make a distinction between the sales forecast and the sales plan primarily because the internal technical staff should not be expected-or permitted-make the fundamental management decisions and judgments implict in every sales plan. Moreover, the influence of management actions on sales potentials is difficult to quantify for sales forecasting. There fore, the elements of management experience and judgment must mold the sales plan. Another reason for identifying sales forecasting as only one step in sales planning is that sales forecasts are conditional.