MYPRODUCT31 From Realism to Over-Optimism in Business Forecasting


At the end of July 2014, a law was passed that prohibited the sale of veterinary medical products in pet shops. Given that our sales of Frontline Combo and Frontline in the pet shop segment represented a significant percentage of total anti-parasitic sales, this law has had direct and immediate consequences on our strategic and tactical plans on short term period.

One of the first consequences was that Veteco stopped from 1st of September 2014 any sales of anti-parasites to customers from the pet shop segment.

As Commercial Manager in Veteco, usually between September-October I was working to finalize our business plan for next year.

Taking into consideration that Veteco is the exclusive partner for the import and distribution of Merial products in Romania, the agreement on the business plan was carried out in close connection with Merial’s management people who obviously were having their own projections and expectations regarding the growing rate of Veteco’s  annual imports and local sales.


In this context, 2014 was a particular year in developing the next year business plan, the key question being if Merial sales / acquisition projections for 2015 have to take into account the fact that we lost the sales of anti-parasitic products in the pet shop segment, sales that represented a significant percentage of the company’s total budget.


In other words, in order to define the 2015 budget, I had the following options.

Budget version 1 which was taking into consideration losses from the pet shop segment but it was targeting a major recovery of the anti-parasitic sales by developing specific commercial actions in the veterinary segment (cabinet and veterinary pharmacies). In this scenario, the projections showed that Merial pet product sales in 2015 will be below the sales achieved in 2014, but the forecasts for 2016 will be above the 2014 level.

Budget version 2 in which we were targeting to fully recover anti-parasitic sales, the 2015 import / local sales budget being estimated at the level of 2014.

Budget version 3 in which even if we lost significant anti-parasitic sales in the pet shop segment, we were assuming that we will reach in 2015 an import and local sales budget for Merial pet products superior to achieved figures from 2014.

This analysed was complemented by some important market considerations:

-all the companies from the industry were affected by this law. As a result, it was predictable that all the companies will try to recover their lost sales via massive commercial actions implemented in the veterinary segment. In other words, the commercial pressure in the veterinary channel will extend, the sales process will imply higher commercial costs and we will face more aggressive competitive conditions.

-pet owners visit veterinary practices and pharmacies only when they have a specific problem with their pet, problem involving the advice / recommendation of the veterinarian. Otherwise, for daily products (foods, cosmetics etc) pet owners usually go to pet shops. Consequently, it was expected that the translation of pet owner from pet shops to veterinary practices and pharmacies will not be instantaneous but it will be a lengthy process (1-2 years) as it involving changes in their acquisition behaviour.

-Independent to Veteco, Merial had its own targets and forecasts, the general expectations being that Veteco has to achieve higher annual imports / local sales.

Although it is obvious that those interests are converging, there are situations when distributor and manufacturer may have different views on the level of products to be marketed on local market in a certain period.


The budget for 2015 was assumed in accord with version 3.

5.Key Leanings

The business plan and targeted sales have as a consequence the alignment of the company’s operations with these objectives. But under the umbrella of these forecasts, not only count the expectations of growth rate and development, but also the calibration of these expectations in accord with market context.

The phrase ” we want, but the market does not allow us ” makes sense sometimes. In this situation over-optimistic or non-achievable forecasts are not beneficial in the short term.

Notification: MYPRODUCT reflects my real professional experience and expertise as well as my subjectivity. I do have a profound respect for all the companies I collaborated to and for all the people I worked with. It is not my intention to approach any sensitive, confidential or offending information related to companies, projects or people. If you the reader deduct or recognise companies, projects or people in my examples, I kindly ask you to respect MYPRODUCT and my professional and ethic approach and to not share any detail, information, situation, name, company.