Business Analysis and Sales Forecasting

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Business Analysis and Sales Forecasting - Activity

Image copyright: Andy Culpin, from stock.xchng.

Date	Sales	% Change
23/07/2005	42,613,500	10.7
16/07/2005	38,481,167	-4.4
09/07/2005	40,234,750	9.5
02/07/2005	36,753,848	-9.6
25/06/2005	40,657,817	14.1
18/06/2005	35,621,747	-1.5
11/06/2005	35,856,330	-1.2
04/06/2005	36,415,071	-6.9
28/05/2005	39,115,774	8.5
21/05/2005	36,036,369	-1.7
14/05/2005	36,666,742	-0.2
07/05/2005	36,746,606	-8.6
30/04/2005	40,188,634	9.1
23/04/2005	36,848,823	-10
16/04/2005	40,943,147	2.1
09/04/2005	40,098,894	8.3
02/04/2005	37,018,536	-5.8
26/03/2005	39,284,245	6.5
19/03/2005	36,884,688	-8.2
12/03/2005	40,192,198	6.6
05/03/2005	37,693,935	-11.6
26/02/2005	42,617,714	1.9
19/02/2005	41,835,753	1.7
12/02/2005	41,125,295	8.3
05/02/2005	37,975,366	-0.7
29/01/2005	38,256,631	-12.9
22/01/2005	43,923,978	4.4
15/01/2005	42,076,402	-4.6
08/01/2005	44,114,366	14
01/01/2005	38,713,457

This Activity looks at some past figures for the sales of the main Saturday lottery draw in the UK. The National Lottery is run by the Camelot Group plc, which in turn is owned by five organisations - Cadbury Schweppes, Royal Mail Enterprises, Fujitsu, Thales Electronics and De La Rue Holdings.

Camelot has run the National Lottery since its inception in November 1994. Sales of tickets grew quickly in the first year, but in recent years, Camelot has faced a challenge in trying to maintain interest in the National Lottery. Sales had dropped, so Camelot responded by offering a range of new games. In the financial year to April 2005, sales had grown by more than £150 million to over £4.7 billion - this was three times more than the increase seen in 2004. 257 million winning tickets have been issued and billions raised for good causes.

The fall in sales and the apparent increased apathy surrounding the Lottery has been a cause for concern for the business. The sales figures for January to July 2005 are given here and are also available in a spreadsheet.

Tasks:

Look carefully at the data in the table to the right. What, if any, trends seem to exist in the data? What explanations can you offer for the trends you identify?
What is the average level of sales for Camelot? How valuable is knowledge of the average sales to a company like Camelot?
Using the data, calculate the three month moving average to find the trend.
Graph both the raw data and the three month moving average data using an appropriate graphical presentation method. Allow space for an additional six months on your graph.
Having drawn your graph, extrapolate the data for the next three months.
Go to the UK National Lottery - Merseyworld Web site(http://lottery.merseyworld.com/Sales_index.html). Access the statistics for the period from July 30th 2005. How accurate was the forecast that you made in question 5 above? Offer some explanations for the possible variation in the data.
In the light of the analysis above and using your own knowledge, evaluate the importance to Camelot of accurate sales forecasting.

Related Web Sites for Further Research:

How to forecast your sales - from Zeromillion.com (http://www.zeromillion.com/business/sales-marketing/sales-forecasts.html)
Sales forecasting - from the Business Performance Improvement Consultancy (BPIC) (http://www.bpic.co.uk/forecast.htm)
More information on sales forecasting - from Fastlink solutions (http://www.fastlinksolutions.co.uk/calculat.htm)
NatWest guide for small businesses on forecasting sales (http://www.natwest.com/business02.asp?id=BUSINESS/BUSINESS_GUIDES/STARTING_A_BUSINESS/BUSINESS_GUIDES/MANAGING_FINANCE/FORECASTING_SALES)

Source of Data: The UK National Lottery - Merseyworld