It's no secret that some products sell better in the summer, others in the 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 should definitely be oriented in seasonality. This is what this article was written for. It will help to understand what the seasonality coefficient is, and will teach it to count so that you can correctly plan your future 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 seasonality coefficient is, what its use is in real life and, of course, how it can be calculated.
What it is?
Seasonality rate is a term that every marketer should know, as it is used everywhere and plays a very important role in the proper planning of sales. This is a coefficient that shows how much the sale of a product increases or decreases depending on the season in which the sale takes place.
Accordingly, if the assortment of the outlet has a large number of seasonal goods, you definitely need to learn how to handle this coefficient, since it will achieve a lot. But how exactly can you use the seasonality factor in real life?
Why is this coefficient needed?
This ratio is far from being only a figure on paper, which can be calculated and put aside. It plays a very important role in real activities if you trade seasonal goods. The scope of this coefficient is extremely wide, but in the first place it is worth noting the fact that it is used to predict future activities. This means that you can decide for which month you order more products of one type or another, and for which less, how to position them to ensure more sales, and so on.
Accordingly, using this coefficient, you can also plan marketing events, and with them the advertising budget, which will be allocated to attract buyers to seasonal goods. As you can see, this indicator can play a key role in your work. If you do not pay attention to it, your advertising budget will in most cases be wasted.
Accordingly, now you know a bit of theory about this coefficient, so it's time to move on to practice, namely the question of calculating this coefficient. This can be done quite simply, but to get reliable results you will have to do a fairly large amount of work. However, this article will guide you step by step through all stages of the calculation, so that in the end you can independently find out this indicator 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 periods of time. This means that you can even calculate the seasonality factor for one week of your activity, in order to clarify which of the days of the week trading is best and which is worse.
Naturally, this has its own characteristics, for example, you will need to order products several times a week to determine the efficiency as accurately as possible, as well as take into account some other factors. It is also worth noting that a week is too short a period that cannot give you a full idea of how well or poorly these or those goods are sold on a particular day of the week.
Traditional period
Thus, it is necessary to focus on the traditional period for this type of calculation. This means that average monthly sales are taken into account, then to calculate the coefficient for each of the months of the year. As a result, you can use the obtained coefficients in order to predict successful implementation immediately for several months in advance, which is a very useful tool in 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 full comparison. Well, now you have enough information to go from the first to the last step of calculating the seasonality coefficient.
Getting statistics
If you want to carry out full and effective sales planning using this ratio, you will need quite extensive statistics. The assortment of your store may contain quite a lot of different seasonal goods, 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 the data of one year, but it is best to have at hand the statistics of sales for the last 2-3 years at least. All seasonal goods must have their own sales statistics, with which you will work in the future to get a ratio.
To continue, you need to calculate the average sales for each year, summing up the sales for each month, and then dividing them by twelve, that is, by the number of months in a year. Now you are ready to get such a coveted coefficient.
Coefficient for each month
The first step is to get a ratio for each month of the year. This is done quite simply: you need to take the sales indicator for each month and divide it by the average sales indicator for the year. The resulting number should be in the unit area. If it is less than one, this means that in a particular month the goods were sold worse, if more - respectively, the goods were sold better than the average for the year.
As a matter of fact, here you got the seasonality factor. You know in which month your product sells better and in which worse, and now you can accordingly forecast sales and promotions. If you trade windows, you can find out in which month it is better to make discounts on plastic windows; if you sell warm clothing, you can understand when to order it in large quantities, and when not to order at all. However, if you want to get the maximum result, the work does not end there.
Average ratio
Before you start making discounts on plastic windows, ice cream or fur coats, it is worth remembering that in order to get the best result you should have in your hands more in-depth statistics for the past few years. If you manage to get such information, you should calculate 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 one, and the reason for this is the fact that your data has become more accurate, therefore, the calculations could 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 beginning of sales of goods, which led to huge demand for them. It could even be a financial crisis, which was felt very strongly in one of the calendar periods. Without expert judgment, your coefficient will be too mathematical, divorced from reality. That is why it is recommended to contact marketing specialists to get the best result.