Some Important Terms in Setting Personal-Selling objectives

Before examining the planning and analytical work involved in setting sales volume objectives, it is important to define three terms: market poten­tial, sales potential, and sales forecast. Some executives use these terms synonymously, but, as the following discussion indicates, there are good reasons to distinguish among them.

1. Market Potential

A market potential is an estimate of the maximum possible sales oppor­tunities present in a particular market segment and open to all sellers of a good or service during a stated future period. Thus, an estimate of the maximum number of low-priced mobiles that might be sold in New Delhi, India, during the calendar year 2017 by all sellers competing for this mar­ket would represent market potential in New Delhi for low-priced mobiles in 2017. A market potential indicates how much of a particular product can be sold to a particular market segment over some future period, assuming the application of appropriate marketing methods.

2. Sales Potential

A sales potential is an estimate of the maximum possible sales opportuni­ties present in a particular market segment open to a specified company selling a good or service during a stated future period. To illustrate, an esti­mate of the number of low-priced mobiles that might be sold in New Delhi, during the calendar year 2017 by Samsung Mobiles would be the 2017 New Delhi sales potential for Samsung low-priced mobiles. A sales potential represents sales opportunities available to a particular manufacturer, such as to Samsung, while a market potential indicates sales opportunities avail­able to an entire industry.

3. Sales Forecast

A sales forecast is an estimate of sales, in dollars or physical units, in a future period under a particular marketing program and an assumed set of economic and other factors outside the unit for which the forecast is made. A sales forecast may be for a single product or for an entire product line. It may be for a manufacturer’s entire marketing area, or for any subdivision of it. Such forecasts are short-term, or operating, sales forecasts rather than long-range sales forecasts, which are used for planning production capacity and for long-run financial planning. Long-range sales forecasts, although of interest, are so tentative that sales planners give them only passing atten­tion. It is the short-term, or operating, sales forecast that is important to the sales executive. Keep in mind, then, that an operating sales forecast is a prediction of how much of a company’s particular product (or product line) can be sold during a future period under a given marketing program and an assumed set of outside factors. ^[1]

Source: Richard R. Still, Edward W. Cundliff, Normal A. P Govoni, Sandeep Puri (2017), Sales and Distribution Management: Decisions, Strategies, and Cases, Pearson; Sixth edition.