3rd Bac - Historical trends and cyclicality

 Sales Trend

Sales trend is a methodology to understand sales results which helps in understanding the trends of the market over a specific period of time. Sales results are an indicative of the sales patterns followed by the customer over a time period. The time period can be short, average or long. Sales trend can be analyzed by compiling the sales and employment over the time period against the financial reports.

Purpose of understanding sales trend:

• It compares the company against its peers and therefore analyses the relative position of the company in the industry

• The company can do better business by following the trend.

• Better understanding of the business facilitates the company to plan its short- and long-term marketing strategies.

• Customer retention (to keep having them as customers)

Sales trend is usually done by the process of customer segmentation. Customer segmentation is done on the basis of products, sales channels, geographic regions etc. Customer segmentation is done such that the customers in a particular segment have similar attributes. Usually customers with similar attributes have the same purchasing behavior.

A typical sales trend includes the following:

• Sales change from the last time period

• Customer segments with the highest growth rate

• Customer segments with the highest revenue

• Customer segments with exponential growth rate

• Sales forecast and so on




Cyclicality

Another premise that the entrepreneur must take into account when making income projections is the cyclical or seasonal nature that sales related to a certain type of economic activity may have.
It is essential that you meet with people who have knowledge about the type of company you plan to create and consult them: in the type of business you plan to undertake, there are marked periods of high or low sales (cyclical fluctuation) or simply income from sales made tend to be permanent without major variations?
With the answer, the entrepreneur is in the ability to make income projections and will have the capacity to decide whether to start the business in the periods of low sales. 
Some seasonal factors, climate, holidays like Christmas can also affect the behavior of the sales.

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