SALES FORECASTING &

TRAINING METHODS
FOLLOWED BY HUNKEMOLLER

SUBMITTED BY
ANKITA CHANDEL
ANKITA SINGH
ARUNIMA SINGH
HARRIS MOHAMMED
PRACHI SINGH
NATIONAL INSTITUTE OF FASHION TECHNOLOGY, NEW DELHI
MASTER OF FASHION MANAGEMENT
SEMESTER II
Contents

CHAPTER 1 .............................................................................................................................................. 1
1.1 SALES FORECASTING: .................................................................................................................... 1
1.2 The Fashion Industry and Its Requirements for Sales Forecasting ............................................... 3
1.3 FACTORS AFFECTING SALES .......................................................................................................... 4
1.4 ORGANIZATIONAL STRUCTURE: .................................................................................................... 5
1.5 SALES FORECASTING APPROACHES ............................................................................................. 5
Top-down or break-down approach: ............................................................................................. 5
Advantages of top Down Method: ................................................................................................ 5
Disadvantage of Top Down Method: ............................................................................................. 6
Bottom- up or build-up approach: ...................................................................................................... 6
1.6 SALES FORECASTING METHODS: ................................................................................................. 7
Quantitative: .................................................................................................................................. 7
Qualitative: ..................................................................................................................................... 8
CHAPTER 2 .............................................................................................................................................. 8
2.1 SALES TRAINING AT HUNKEMOLLER ........................................................................................... 8
2.2 THE SELLING PROCESS .................................................................................................................. 9
2.3 ROLE OF SALES MANAGER ......................................................................................................... 10
2.4 TRAINING NEED OF AN INDIVIDUAL PERSON ..................................................................... 10
2.5 AMOUNT OF TRAINING REQUIRED............................................................................................ 11
2.6 TRAINING PROGRAM DESIGN .................................................................................................... 11
2.7 TRAINING EVALUATION ............................................................................................................. 13

CHAPTER 1
1.1 SALES FORECASTING:
The clothing industry includes many companies from the spinning to the distribution, which
are involved from the transformation of the fibre until the final garment .Consequently; the
creation of a garment requires a quite long and complex process with many manufacturing
steps. The fashion and ephemeral aspect of the finished products contrasts with this long
manufacturing process. However, the main actor of this network is the distributor
downstream of the process. It makes orders for the upstream companies and supplies the
consumer with their products: it is the driver of the all flows in the process. These different
stages with quite long and fluctuated manufacturing times involve a management based on a
push flow strategy, which makes the supply chain very sensitive to the bullwhip effect.

In this context, sales forecasting emerges as a key success factor of the supply chain
management However, the specificities of sales in the clothing sector make the forecasting
process very complex. Indeed, the long and incompressible manufacturing and shipping lead
times required to be provided with long-term forecasts. Forecasting systems have also to take
into account the particularities of the clothing itself:

• Strong relationships between most garments and the weather make the sales very seasonal.
Seasonal data give general trends but unpredictable variations of weather involve significant
peaks or hollows.

• Sales are disturbed by many exogenous variables such as end-of-season sale, sales
promotion, purchasing power of consumers, etc.

• Fashion trends provide very volatile consumer demands [55]. The design and style should
be always up to date and most of the items are not renewed for the next collection.
Consequently, historical sales are often not available since most of items are ephemeral.

• Product variety is huge. Indeed items are declined in many colour alternatives to meet the
fashion trend, and in various sizes which should match with morphologies of the target
consumers. All these constraints make the sales forecasting for apparel companies very
specific and complex. Therefore the implementation of such forecasting systems requires not
only a strong background in the field of forecasting, but also a full and precise knowledge of
the operations and challenges of the fashion industry and its supply chain.

The purpose of sales forecast is to plan and achieve the forecasted sales in an effective
manner. Sales forecast are used by other functions:

 Manufacturing or production for setting up production capacity and planning

production
  Finance for raising cash for investment and operations as well as for profit planning
 Purchase function for planning and their purchases
 Human resource management for manpower planning

Thus, sales forecast has a role as a forerunner to all planning activities in an organization.
Accurate sales forecast is important because all functions base their plans on such forecast.

 Benefits of sales forecasting:

 Get a single unified view into achieving revenue goals.
 Manage your team and sales performance.
 Plan cash flow.
 Plan post-sales support.

1.2 The Fashion Industry and Its Requirements for Sales Forecasting

Usually, the decision process in the fashion company starts with the definition of budget for
the collection and/or the sourcing. When designers have selected the items which should be
included in the collection, the mix of budget and sales forecasting enables managers to launch
the purchases or the production. In fashion industry, it is commonly known that consumer
demands are very volatile. Indeed, consumers are very unfaithful and generally their selection
is first based on the price of the product. Facing these constraints, companies try to reduce
their production costs by keeping a high service level. Thus, most of manufacturing processes,
are performed in far away and low cost countries. This strategy leads to the increase in the
lead time and the lot size of supplies. Consequently, the supply chain management has to be
optimized to avoid delay, out of stock, unsold and to keep the right inventory level. Therefore,
many supply chain management tools have enabled companies to improve scheduling and
synchronizing of material and information flows. Most of these tools can be customized to
the specific constraints of the clothing retailing, however their efficiency is mostly dependent
of the accuracy of sales forecasts. In order to perform suitable sales forecasting for the supply
chain management, it is crucial to perfectly know the product, the sales features and how the
distributor will use the forecasts, especially in the very specific environment of the fashion
industry.
The following subsections describes the main characteristics which should be taken in account
to design a sales forecasting system for the fashion industry.

 Time
 Lifecycle
 Aggregate level
 Seasonality
 Exogenous variables
1.3 FACTORS AFFECTING SALES

There could be a number of factors affecting the sales of a particular clothing item. Few of
them are controllable and few are not. It generally emerges that for most companies, based
on push flow supply chain, sales forecasting arises as an important factor for the supply chain
management.
1.4 ORGANIZATIONAL STRUCTURE:

The organization follows a relatively flat organizational structure and the sales organization
structure is majorly based on product specialization.

1.5 SALES FORECASTING APPROACHES

Top-down or break-down approach:

Top-down sales forecasting begins with combined data on sales of all products, for example
all models or colors in all locations. Then it applies the methods of statistics to predict sales
of individual items at particular locations. Depending on the scope of the business, this
means breaking down the overall sales prediction into multiple brands, products or even
SKUs. This method of forecasting begins with the big picture and breaks it down into the
component parts.
Advantages of top Down Method:
Top-down forecasting works well when the market forces on various product items or sales
areas are similar. For example, if the markets for baseballs and baseball bats move together,
it makes sense to predict their sales together. Many times, individual products will not
generate sufficient data for forecasters to make meaningful predictions. The larger amount
of data on more items will make patterns easier to see and provide a more accurate
forecast. Top-down forecasting works well for budget and strategy planning because it
successfully predicts the big picture of overall sales.
Disadvantage of Top Down Method:
Top-down forecasting predicts sales poorly when the markets and advertising of individual
items are different. Top-down forecasting is thus often less successful than bottom-up
forecasting at the item level. Because all products and regions are lumped together, top-
down forecasting averages out the low and high sales numbers. The resulting average
doesn't properly represent any individual component. For this reason, bottom-up
forecasting works best for planning of manufacturing and distribution.

forecast economic conditions

determine market potential

estimate market share

forecast sales

Bottom- up or build-up approach:

In the bottom-up sales forecasting approach, managers and employees at the department
level prepare budgets for their individual departments. A final, organizational budget is
prepared by consolidating all individual, department budgets.

 High deployment coverage in early phases

 Earlier return on investment
 High visibility of organizational changes
 Higher impact to organization
Advantages of bottom-up sales forecasting:

 User and business awareness of the product. Benefits are realized in the early
phases.
 You can replace many manual processes with early automation.
 You can implement password management for a large number of users.
 You do not have to develop custom adapters in the early phases.
 Your organization broadens identity management skills and understanding during
the first phase.
Disadvantages of bottom-up sales forecasting:
  The organizational structure you establish might have to be changed in a later roll-
out phase.
 Because of the immediate changes to repository owners and the user population,
the roll-out will have a higher impact earlier and require greater cooperation.
 This strategy is driven by the existing infrastructure instead of the business
processes.

salesperson sales forecast of individual

customers

combined into area/branch sales forecast

combined into regional/zonal forecast

combined into company's sales forecast

The brand follows a mix of both top down and bottom up approach for its sales forecasting
to ensure accuracy in the forecast.

Hunkemöller applies a mix of both approaches top-down and bottom-up approach. The
company forecasts for the entire business from the overall sales data using the top-down
approach and keeping in the mind all the economic conditions and the market potential and
then uses the bottom-up approach to bring down the forecast down proportionately to the
item level. Bottom-up approach is used in such a way that the salespersons are asked for their
suggestions on what will sell accordingly different styles also come in to the shops. For ex:
Hunkemöller does not makes wire free bra but in India wire free bra are quite popular. This
data was shared with the company by the salespersons of different shops that there was a
demand of wire free bra and this product has a potential to do good in the market. So, the
top officials of the company did a research on this and finally introduced the product in the
Indian market. Thus, this involved using a mix of both approaches bottom-up and top-down
approach.

1.6 SALES FORECASTING METHODS:

Quantitative:
Quantitative forecasting methods are used when there is historical data available. A number
of different models can be used to forecast future events. Quantitative methods rely heavily
on data and are objective.

When historical data are available, the forecasting system has to extract the maximum
information as possible from the past years. For fashion items such as garments, these
information are the traditional trend and seasonality but also the impact of exogenous
factors. If the two firsts should require many attentions and skills, the last one is very difficult
to model and to control and requires advanced techniques. For accurate forecasting based
on the historical data, while also keeping in mind the external factors, the brand use the
following two methods:

 Time series analysis

 Use of market research data
Qualitative:

Qualitative forecasting methods are used when historical data is not available to carry out
quantitative methods. This method involves the use of opinions to predict future events and
are subjective. Most of fashion items are sold during only one season. Companies have to
estimate the sales without any historical data: the forecasting system should be then
designed for new product sales forecasting. New product forecasting is one of the most
difficult forecasting problem . Indeed, forecasting methods are not suitable. In this context, a
two-step methodology is used by the brand:
1. To cluster and to classify new products to forecast their sales profile (mid-term forecast).
2. To adapt and to readjust this profile according to the first weeks of sales (short-term
forecast).
If no historical data exists for the considered item, but similar products have already been
sold in previous seasons. Indeed, new products usually replace old ones with almost the same
style and/or functionality, it is thus possible to use historical data of similar products to
estimate the sales profile of the new product. Thus, to forecast the sales profiles of new
products such as garments with clustering and classification techniques, descriptive attributes
(price, life span, sales period, style ) of historical and new products are taken into account.
The aim is to model the relationship between historical data, i.e. between sales and
descriptive criteria of related items, and then to use these relationships to forecast future
sales from descriptive criteria of new items.

CHAPTER 2

2.1 SALES TRAINING AT HUNKEMOLLER

Each organization has specific requirements and they need to train their sales people
adequately with respect to their specific needs. In general, you can categorize sales
training in three ways: sales methodology training, sales skill development, and
product training. Most sales training companies offer some combination of sales
methodology training and sales skill development.
At Hunkemöller, the sales training is majorly classified into two types.

SALES TRAINING

SALES METHODOLOGY SALES SKILL TRAINING

PRODUCT TRAINING
TRAINING AND GROOMING

The sales methodology and sales skill & grooming training come under soft skills
training and product training is carried out separately.
The sales staff receives eight training annually, which are dispersed to two trainings
per quarter. The eight trainings include four soft skills training & 4 -product training.

2.2 THE SELLING PROCESS

The company follows a customer-oriented approach to personal selling. They train
their sales force to identify customer’s need and then to find a solution to it. A good
sales person is known to possess the following characteristics:

 Confidence
 Patience
 Polished and properly groomed
 Improvisation
 Detachment
To make sure that the customer has a delightful experience when he or she
visits the store, the brand follows a 12-step service cycle and all the training
programs are designed around that service cycle.
2.3 ROLE OF SALES MANAGER
Sales manager are in charge of personal selling activity and management of the
personal sales force. They are responsible for organizing the sales effort both within
and outside the company. Within the company, the sales manager builds formal and
informal organization structures that ensure effective communication not only inside
the sales department but also in its relations with other departments. Outside the
company, the sales manager serves as a key contact with the customers and is
responsible for building and maintaining an effective distribution network. T hey
participate in decisions on products, marketing channels and distribution policies,
advertising and other promotion, and pricing. Thus, the sales manager is both an
administrator in charge of personal selling activity and a member of the executive
group that makes marketing decisions of all types.

2.4 TRAINING NEED OF AN INDIVIDUAL PERSON

The assessment of training needs is the most important step in designing a sales
training program, provides the starting point for setting training goals and designing
the program. The company uses the analysis to identify weaknesses in selling skills
and then designs programs to eliminate these weaknesses.
The manager breaks down the broad objective of increasing productivity into specific
goals for the individual salesperson, such as improving product knowledge,
prospecting methods, grooming needs and soft skills.
Setting these training objectives:

 Helps the trainer and trainee focus on the purpose of training.

 Guides prioritization and sequencing of training
 Helps deciding the choice of training methods.
 Provides a standard to measure training effectiveness.

As the training program vary depending on the nature of the trainee, the
programs designed for a fresher are more comprehensive than the program
intended to refresh the selling skills of experienced sales person or updating
the sales force on new products.

2.5 AMOUNT OF TRAINING REQUIRED

 The extent of training depends on the training objectives:
 New promotional program- 3-4 hrs.
 New product or service- 3-4 hrs.
 Program to improve the customer orientation-2-3 days
 Program to train a new trainee- 2-3 weeks

2.6 TRAINING PROGRAM DESIGN

1) Who should do the training?
Weekly trainings are conducted by the sales manager and for product and soft
skills training, special trainers are hired by the organization.

2) When should the training take place?

As per the organizational beliefs, the need for training does not end with the
completion of the initial program, they see training as a continual function. It
never ceases, it only changes form. Salespeople periodically need refresher
courses at different stages of their professional development.
3) Where should it be done?
The training program designed by the organization is of 2 types - Centralized
training and Decentralized training.
Centralized training takes place at a central location and are designed
specially for new trainees. It includes one week training conducted at their
head office which is located in Mumbai, Maharashtra.

All the other training programs designed by the organization are decentralized
in nature. The sales manager and the trainers who are hired by the
organization (on job training) usually conduct these trainings .
 Decentralized training also included a web based training program-
Hunkemöller Academy, which is a training module designed by Hunkemöller
for its stores worldwide.
4) What should be the content of the training?
The primary purpose of most sales training programs is either to teach people
to sell or to improve their current selling skills. Therefore, a significant amount
of training content is devoted to product knowledge and persuasive
communication skills. Other topics that are focused are trainee ’s attitude
towards the selling job and toward training, knowledge of the company,
product knowledge and application, knowledge of competitive products,
knowledge of customers, knowledge of business principles, selling skills,
relationship building skills, team selling skills, time management skills,
computer assisted selling skills and knowledge of the legal constraints on
selling. Not every training program should necessarily cover all of them at one
time. Rather the specific content of the training vary depending on the
objectives of that particular training session.

5) What teaching methods should be used?

The various training methods used are the following:
Lectures- The lecture method can allow trainers to present more information
in a shorter time to a group of participants. Selling techniques are best taught
by participation methods, but a limited number of short lectures introducing
trainees to the underlying problems and principles can be extremely helpful
in most sales training programs.
Discussion- Discussion plays a huge role in any sales training program, since it
gives the trainees and opportunity to work through their own problems. It is
the best method for making the experiences of competent salespeople
available to trainees. It is also the best method for letting experiences sales
person exchange thoughts.
Demonstrations- Demonstrations can be used to great advantage in teaching
both product knowledge and selling techniques. Instead of just telling trainees
about the different types of questions that can be used to probe for
information, for example – A skit to demonstrate the questions in a given
context.

Role playing- In role playing the trainee attempts to sell a product to a

hypothetical prospect. Often these role plays are videotaped and critiqued by
the trainer or peers. This type of learning by doing education can be highly
effective in teaching selling techniques, particularly in initial training prgrams.

Web based training- The web based training are introduced to save money or
to reach employees in far flung global locations.
 On the job training- This is the most popular form of sales training. The sales
trainees are observed on the shop floor while attending to the customers, by
trainers. Then the trainers and trainee discuss what took place and what could
have done more effectively. This method is used as the final stage of trainee’s
sales education.

2.7 TRAINING EVALUATION

During the training evaluation phase, sales executives must assess the
effectiveness of their training programs. Evaluation is necessary to determine
the value of the training and to improve the design of future programs. In
evaluation, executives decide what outcomes should be measure and how
these outcomes will be measured. Outcomes usually fall in the following
categories:

 Participation of the trainee

 Learning
 Behavior and Grooming
 On the job performance

Based on the above-mentioned categories, the trainees are given scores out
of hundred based on their performance. These scores are also a part of the
factors that are considered during the appraisal and promotion of any sales
trainee.

Another training evaluation method used by the organization is mystery

shopping. Mystery shopping is conducted by third party organizations and
each store witnesses 5-6 mystery shopping in a year. The mystery shopping
reports of each store goes directly to the CEO of the company.

SOURCES
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http://www.ddegjust.ac.in/studymaterial/mba/mm-308.pdf

Sales and distribution management by Krishna K Havaldar and Vasant M Cavale