Forecasting for managers

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6ECON006W: Forecasting for Managers

Coursework (100%)

HBAT: Understanding Customers1

HBAT (Hair, Block, Anderson and Tatham Company) sells paper products to two market segments: the newsprint industry and the magazine industry. Further, these paper products are sold to these market segments, either directly to the customer or indirectly through a broker. HBAT wanted to develop a better understanding of both the characteristics of its customers and the relationships between their perceptions of HBAT, and their actions towards HBAT (e.g., satisfaction and likelihood to recommend). From this understanding of its customers, HBAT will be in a good position to develop its Forecasting plan for the next year.

To develop this level of understanding of its situation, a survey of existing customers of HBAT was conducted through an established marketing research firm. Three types of information were collected in a survey of 200 purchasing managers from firms buying from HBAT. A first type of data reflects the characteristics of the respondent and includes information such as the size of the customer and length of the purchase relationship. The second type of information was perceptions of HBAT’s performance on 13 attributes. These attributes (developed through focus groups, a pre-test, and used in previous studies) are considered to be the most influential in the selection of suppliers in the paper industry. The third type of information relates to purchase outcomes and business relationships (e.g., satisfaction with HBAT and whether the firm would consider a strategic alliance / partnership with HBAT).

The data are available in the HBAT DATA.xls file on Blackboard and a definition of each variable and an explanation of its coding are given in Appendix 1. Please assume the sample of 200 respondents is representative of HBAT’s customers.

In addition, management at HBAT have provided you with sales data from 2010 to 2018 on a monthly basis. Please see Table 1;

Table 1. HBAT sales (in £000s)

Month	2010	2011	2012	2013	2014	2015	2016	2017	2018
January	139.7	165.1	177.8	228.6	266.7	431.8	381	431.8	495.3
February	114.3	177.8	203.2	254	317.5	457.2	406.4	444.5	533.4
March	101.6	177.8	228.6	266.7	368.3	457.2	431.8	495.3	635
April	152.4	203.2	279.4	342.9	431.8	482.6	457.2	533.4	673.1
May	215.9	241.3	317.5	355.6	457.2	533.4	495.3	558.8	749.3
June	228.6	279.4	330.2	406.4	571.5	622.3	584.2	647.7	812.8
July	215.9	292.1	368.3	444.5	546.1	660.4	609.6	673.1	800.1
August	190.5	317.5	355.6	431.8	482.6	520.7	558.8	660.4	736.6
September	177.8	203.2	241.3	330.2	431.8	508	508	609.6	685.8
October	139.7	177.8	215.9	330.2	406.4	482.6	495.3	584.2	635
November	139.7	165.1	215.9	304.8	393.7	457.2	444.5	520.7	622.3
December	152.4	177.8	203.2	292.1	406.4	431.8	419.1	482.6	622.3

The Tasks

Please write a report, of no more than 3,000 words, to the management of HBAT addressing the following issues:

Part (a) -Forecasting comparison practice

· Describe the historical data on HBAT sales, including a discussion of the general direction of sales and any seasonal tendencies that might be occurring.

· Choose, giving your justification, which time series forecasting techniques are appropriate for producing forecasts with this data set. Compare the models based on ex post forecasts. Use your chosen forecasting model to generate forecasts for each of the months in year 2019.

· Discuss how these forecasts might be integrated into the planning operations and policy required by management at HBAT.

Part (b) -Regression Analysis

· Develop model/s to predict satisfaction from the perceptions of the performance variables. What are the most influential performance variables?

· Make a recommendation to HBAT that enhances their understanding of their customers so that the management can develop its marketing plan that will feed into their Forecasting Plan for the next year.

The Report and supporting appendices, if any, should be combined into one document, which must be submitted

by 13:00 on 28th April 2021 via Blackboard only. It will automatically be scanned through a text matching system (designed to check for possible plagiarism). YOU MUST include the title of the report and word count on the first page of your assignment.

1Adapted from Hair, Joseph F. Jr., William C. Black, Barry J. Babin, and Rolph E. Anderson, Multivariate Data Analysis,

International Edition, 7th Edition, Pearson Higher Education.

APPENDIX 1

Questionnaire Details

Customer Characteristics

The five characteristics of the responding firms reflect the basic characteristics and their business relationship with HBAT. The five variables are as follows:

Variable	Name	Definition	Coding
X1	Customer Duration	Length of time a particular customer has been buying from HBAT	1 = Less than 1 year; 2 = Between 1 and 5 years; 3 = Longer than 5 years
X2	Customer Type	Type of industry that purchases HBAT’s paper products	0 = Magazine; 1 = Newsprint
X3	Customer Size	Based on number of employees	0 = Small firm, < 500 employees; 1 = Large firm, ≥ 500 employees
X4	Customer Region	Customer location	0 = EU; 1 = Outside EU
X5	Distribution System	Sales and services are provided through this distribution system	0 = Indirectly through a broker; 1 = Directly through salesforce

Perceptions of HBAT’s Performance

Each of these variables was measured on a graphic rating scale, where a ten-centimetre line was drawn between the endpoints, labelled "Poor" and "Excellent". Respondents indicated their perceptions by placing a mark anywhere on the line. The mark was then measured and the distance from zero (in centimetres) was recorded. The result was a scale ranging from zero to ten, rounded to a single decimal place. The thirteen attributes rated by each respondent are as follows:

Variable	Name	Definition
X6	Product Quality	Perceived level of quality of HBAT’s paper products
X7	E-Commerce Activities/Website	Overall image of HBAT’s website, especially its user-friendliness
X8	Technical Support	Extent to which technical support is offered to help solve product/service issues
X9	Complaint Resolution	Extent to which any complaints are resolved in a timely and complete manner
X10	Advertising	Perceptions of HBAT’s advertising campaign in all types of media
X11	Product Line	Depth and breadth of HBAT’s product line to meet customer needs
X12	Salesforce Image	Overall image of HBAT’s salesforce
X13	Competitive Pricing	Extent to which HBAT offers competitive prices
X14	Warranty & Claims	Extent to which HBAT stands behind its product/service warranties and claims
X15	New Products	Extent to which HBAT develops and sells new products
X16	Ordering & Billing	Perception that ordering and billing is handled efficiently and correctly
X17	Price Flexibility	Perceived willingness of HBAT sales representatives to negotiate price on purchases of paper products
X18	Delivery Speed	Amount of time it takes to deliver the paper products once an order has been confirmed

Purchase Outcomes & Relationship

The first four variables below are measured on a graphic rating scale, where a ten-centimetre line was drawn between the endpoints, labelled as indicated in the coding column. Respondents indicated their perceptions by placing a mark anywhere on the line. The mark was then measured and the distance from zero (in centimetres) was recorded. The result was a scale ranging from zero to ten, rounded to a single decimal place. Five specific measures were obtained that reflected the outcomes of the respondent’s purchase relationships with HBAT. These measures include:

Variable	Name	Definition	Coding
X19	Satisfaction	Customer satisfaction with past purchases from HBAT	0 – 10 graphic scale, where ‘0’ indicates "Not at All" and ‘10’ indicates "Completely Satisfied"
X20	Likely to Recommend	Likelihood of recommending HBAT to other firms as a supplier of paper products	0 – 10 graphic scale, where ‘0’ indicates "Not at All Likely" and ‘10’ indicates "Definitely"
X21	Likely to Purchase	Likelihood of purchasing paper products from HBAT in the future	0 – 10 graphic scale, where ‘0’ indicates "Not at All Likely" and ‘10’ indicates "Definitely"
X22	Purchase Level	Percentage of the responding firm’s paper needs purchased from HBAT	Measured on a 100-point percentage scale
X23	Consider Strategic Alliance	Extent to which the customer/respondent perceives his or her firm would engage in strategic alliance/partnership with HBAT	0 = No, would not consider; 1 = Yes, would consider