A method commonly used by companies for short-term forecasts is to take advantage of their field staff's intimate knowledge of customers' needs and market conditions by asking them to forecast the company's sales for their respective areas for the coming season or year. To enhance accuracy of the forecast and facilitate its preparation field staff should be provided with the following background material:
information on the overall market situation, such as changes in government policies impinging on fertilizer consumption, changes in competitors’ position, imports and overall availability. Staff at field level are often unaware of developments at the macro level and, without such knowledge, become unduly influenced by local conditions leading to over-pessimistic or over-optimistic estimates;
sales, by dealer, for the previous three years;
the format in which the forecast is required. (see Annex III for specimen format).
The past record of dealers enables sales staff to classify the outlets as follows:
dealers active in previous season or year but now declining;
dealers with promise of higher sales in coming season or year;
dealers not presently carrying the company's products but who are potential contributors to increased sales.
If incentives are extended to field staff linked to their reaching and exceeding sales quotas, it is to be expected that their forecasts will be on the low side to make attainment of quotas easier. An adjustment for this has to be made to bring the forecast more in line with immediate market potential. An important advantage of this method is that it creates a sense of commitment among the field staff to attain sales targets. It also provides enough information for compiling a detailed breakdown of expected sales by product, area, dealer outlet and time.
In Pakistan, where marketing organisations have been successfully practising this method, the medium-term forecast is made at the field level, moderated at the regional level and further refined at the Head Office. The refinement at the Head Office is done by utilising the historical trend, as well as the judgement of managers, the latter related to assessment of factors such as price, availability of funds with farmers and likely credit availability. The branches are provided with the following data to enable them to prepare the forecast:
total market sales of fertilizer by type;
the company's sales of the fertilizer by type, year, month, and area;
critical assumptions concerning overall availability at the national level, likely imports and government support prices for major crops.
The field estimates can be adjusted by routing them through the Area Manager who applies his judgement and knowledge of the market. Further refinement takes place at the Head Office where the expertise of senior staff is used for further corrections in the light of macro-economic factors influencing fertilizer demand. The marketing staff at the Head Office are also in a position to assess additional sales possibilities arising from the company's organisational, advertising and promotional plans for the next season or year. Subject to these refinements this method is most useful for marketing organisations and wholesalers to make short-term sales forecasts. It is necessary for a marketing organisation to know the overall fertilizer demand to be aware of its market share and to determine further strategies for maintaining or improving upon it. Without an appreciation of the overall demand and growth factors, the forecast compiled by the field staff method is to be considered inadequate as sales may fail to keep pace with overall growth, resulting in the company steadily losing its market position.
While this system is primarily used by companies for sales forecasts, the same approach can be applied by the government to compile short-term demand forecasts. This is done by asking local agriculture department officials to estimate the demand for the following season or year. In countries where information on fertilizer distribution is required to be supplied by law, past offtake data is already available with local officials as they also perform the data collecting function for the Ministry of Agriculture. This system of short-term demand forecasting has been in practice in some countries for many years. However, local officials tend to exaggerate estimates to avoid any semblance of shortage and the risk of having to face angry farmers in the event of a shortfall in supply. To counter this, demand estimates can be obtained (total demand, not just the company's sales) simultaneously from the lead marketing company in each district, for comparison with the provincial officials' forecasts. The two sets of forecasts can then be discussed at the provincial level and a consensus reached. Experience shows that this procedure has a high degree of accuracy.
