It is always preferable to err on the side of conservatism when forecasting sales.
The marketing plan would not be complete without a financial statement setting out forecast revenue, marketing and other costs and overheads and projected profit levels and margins.
This is an examination of the practicality of the marketing plan and its ability to meet corporate expectations.
To gain an indication of the degree of risk in the plan it is advisable to base projections on three levels - ‘pessimistic', ‘optimistic' with ‘most likely' in the middle of the range.
It is important that projections are accurate and realistic. If launching a new product do not under estimate initial financial requirements. It is better to err on the conservative side when forecasting sales and on the excessive side when estimating expenses.
Depending on the degree of investment in the plan in some cases it might be acceptable to set ‘break even' or even negative returns for a predetermined period. This scenario would be more likely when the plan is based on the development of a new product or a new product range where the costs of development could be borne by established ‘cash cows' in the company's product portfolio. In any case the parameters of the plan and the degree of risk-entailed need to be clearly quantified and understood.
