Predictive strategic marketing management decisions in small firms: A possible Bayesian solution

Abstract

Purpose

The purpose of this paper is to suggest a framework for sales forecasting more suitable for smaller firms. The authors examine the sales forecasting practices of small firms and then proceed to discuss the application of Bayesian decision theory in the production of sales forecasts, a method arguably more suited to the smaller firm. The authors suggest that many small firm entrepreneurs are inherently “Bayesian” in their thinking approach to predicting events in that they often rely on subjective estimates at least for initial starting values.

Design/methodology/approach

A triangulated approach which uses qualitative group discussions and thematic content analysis, a reasonably large‐scale questionnaire sample survey administered by post and analysed using descriptive statistics and non‐parametric tests of association and a case study approach based on the authors own consultancy activities to illustrate the practical application of the forecasting model suggested.

Findings

That many small firms use no formal sales forecasting framework at all. That the majority of small firm owners and/or managers rate sales forecasting skills very low in their list of priorities when given a choice of course to attend at subsidised rates. That there is no significant difference in the importance small firm owners and/or managers attach to formal sales forecasting skills.

Research limitations/implications

Information has been gained from one geographic area in the north of England although the results may have a wider application to all small firms in the UK and elsewhere. Only the region's six most important industry sectors were included as stratification variables in the sample survey. Other regions will have a different mix of industries and will be stratified differently.

Originality/value

The article addresses the sales forecasting needs of small firms specifically within the marketing for small business context and offers a realistic option with a clear rationale.

Citation

Lewis Reynolds, P. and Lancaster, G. (2007), "Predictive strategic marketing management decisions in small firms: A possible Bayesian solution", Management Decision, Vol. 45 No. 6, pp. 1038-1057. https://doi.org/10.1108/00251740710762062