It's no secret that some goods sell better in summer, others in winter. There are many examples: ice cream, warm clothes, and so on. Most people do not really pay attention to these jumps, however, if you have your own business, you definitely need to be aware of the seasonality. That is what this article was written for. It will help you understand what the seasonal factor is, teach you how to calculate it, so that you can correctly plan your further sales.
If you do not think about the seasonality of certain goods, the business will constantly suffer losses, and you will not be able to plan your activities normally. So, it's time to find out what the seasonal factor is, what is its application in real life and, of course, how exactly it can be calculated.
What is this?
Seasonal factor is a term that every marketer should know, as it is used everywhere and plays a very important role in proper sales planning. This is a coefficient that shows how much sales of a particular product increase or decrease depending on the season in which the sale takes place.
Accordingly, if in stockthe outlet has a large number of seasonal products, you definitely need to learn how to handle this coefficient, as it will allow you to achieve a lot. But how exactly can the seasonal factor be used in real life?
What is this ratio for?
This ratio is far from just a number on paper that can be calculated and put aside. It plays a very important role in real life if you are selling seasonal goods. The scope of this coefficient is extremely wide, but first of all it is worth noting the fact that it is used to predict future activities. This means that you can decide which month you want to order more of one type or another, and which one - less, how to position them to generate more sales, and so on.
Accordingly, with the help of this coefficient, you can also plan marketing activities, and with them the advertising budget, which will be allocated to attract the attention of buyers to seasonal goods. As you can see, this indicator can play a key role in your activity. If you do not pay attention to it, your advertising budget will be wasted in most cases.
Accordingly, now you know a little theory about this coefficient, so it's time to move on to practice, namely to the issue of calculating this coefficient. This can be done quite simply, but to get reliable results you will have to doquite a lot of work. However, this article will take you step by step through all the steps of the calculation, so that in the end you can find out this indicator yourself if you have the necessary financial information.
Periods of use
Before considering the calculation algorithm itself, it is necessary to clarify one important detail. The fact is that this coefficient is universal, that is, it can be used for a wide variety of periods and lengths of time. This means that you can even calculate the seasonal factor for one week of your activity to find out which days of the week are the best and which are the worst.
Of course, this has its own characteristics, for example, you will need to order goods several times a week to determine the effectiveness as accurately as possible, as well as take into account some other factors. It's also worth noting that a week is too short a period to give you a full idea of how well or poorly certain products are selling on a particular day of the week.
Traditional period
Thus, it is necessary to focus on the traditional period for this type of settlement. This means that the average monthly sales are taken into account in order to then calculate the coefficient for each of the months of the year. As a result, you can use the obtained coefficients in order to predict the successful implementation immediately for several months in advance, whichis a very useful tool when planning activities.
So, now you understand that it is best to choose a month as a period of time and at the same time consider all periods in the context of one year in order to make a meaningful comparison. Well, now you have enough information to go from the first to the last step of calculating the seasonal factor.
Getting statistical data
If you want to conduct a full and effective sales planning using this ratio, you will need quite extensive statistics. Your store can have quite a lot of different seasonal products in the assortment, so you should immediately understand that the calculation should be made separately for each of them.
So, choose one of the products and raise its sales statistics every month for a year. The deeper you can dig into statistics, the more accurate your data will be. Of course, you can use data from one year, but it would be best to have at hand sales statistics for the last 2-3 years at least. All seasonal items must have their own sales statistics, which you will work with in the future to get a coefficient.
To continue, you need to calculate the average sales for each year by adding up the sales for each month and then dividing by twelve, which is the number of months in a year. Now you are ready to get your coveted multiplier.
Coefficient for eachmonth
The first step is to get the coefficient for each month of the year. It's quite simple to do: you need to take the sales figure for each month and divide it by the average sales figure for the year. The resulting number should be around one. If it is less than one, it means that in a particular month the product was sold worse; if it is more, the product was sold better than the average for the year.
Actually speaking, here you have the seasonal factor. You know which month your product sells best and which sells worst, and now you can forecast sales and promotions accordingly. If you sell windows, you can find out in which month it is better to make discounts on plastic windows; if you sell warm clothes, you will be able to understand when to order them in large quantities, and when not to order at all. However, if you want to get the most out of it, the work doesn't end there.
Average odds
Before you start discounting plastic windows, ice cream or fur coats, it's worth remembering that to get the best result, you must have in your hands more in-depth statistics over the past few years. If you manage to acquire such information, it is worth calculating the coefficients for each of the months in each year, and then calculate the arithmetic average for each month. The result may differ from the original, and the reason for this is the fact that your data has becomemore accurate, so the calculations were able to give a more reliable ratio.
Expert opinion
Well, the last thing you should not forget about is the expert opinion. What is meant by this term? This is a consideration of all additional aspects that could affect sales in one of those months that were considered in the calculation. This may be a shortage of goods or its extensive supply; the start of sales of the product, which led to a huge demand for it. It may even be a financial crisis, which was very strongly felt in one of the calendar periods. Without peer review, your ratio will be too mathematical, out of touch with reality. That is why it is recommended to contact marketing specialists to get the best result.
