Harmon Foods Inc. Harvard Case Solution & Analysis

The Problem Statement

Huge variations in the forecasting of sales for the Treat product of Harmon Foods, a ready-to-eat breakfast cereal allowed the company to develop a robust forecasting technique that could help them in their forecasting. The company faces a variation of 50% to 200% in comparison with its actual sales. Therefore, the company was also facing inventory problems, increase in their cost of production, and the profitability of the company became low. Moreover, the advertisement and the marketing cost is also increased as a result of poor forecasting techniques adopted by the company. Therefore, in order to avoid related problems, the company must develop a robust sales forecasting technique which can allow the company in deciphering the actual future sales.

harmon foods case solution

harmon foods case solution

Key Factors affecting the Demand and Shipments

While considering the case for Harmon Foods, Inc. the factors which were affecting the demand and shipment of Treat are been mentioned below:

1. Market Share: It is expected that the market share for Treat will remain steady in the market, and as well as in the commodity group as it was discovered in a research conducted by A.C Nielsen.

2. Seasonal Factors: The sales for Treat varied in different seasons as due to the vacations of their sales personnel in the summer season and plant shutdowns, the sales were comparatively lower than expected.

3. Non-Media Promotions: This factor has reasonably performed well for the company as it has strong influence over the company’s product. This strategy includes discounts that are passed to consumers and the dealers so that they could promote the Treat product through monetary benefits.

Although, there are also other factors involved for the management to consider for sales forecasting which has been discussed below:

1. Competitors’ Strategies: The Company also needs to have a close watch on its competitors’ promotional strategies and their pricing because this will help in devising a proper strategy for the company and will affect its sales. The brand managers of Treat has taken the necessary information of their competitors which will help the company in forecasting of its sales.

2. Substitute and Compliment Products: The price variation in the substitute and the compliment products for Treat which probably includes milk and oatmeal, it can either positively or negatively affect the sales for the company.

3. Changes in Income Levels: The variations in income level also affects the sales of the company because a target segment of Treat also target those customer which are price-sensitive which would be greatly affected by this move.

Recommendations

The analysis is conducted by taking an assumption that the consumers and the dealers will help the company in increasing its current sales, however they would also stock up products in the particular period which would allow them to decrease the future sales. Therefore, in order to assist the GM John MacIntyre, following regression equation has been developed in assisting the company in sales forecasting for Treat:

Case Shipments/Sales = -80260.86 + 1083.87T + 3911.33S + 0.085C + 0.068D - 0.045CL - 0.018DL-2

The above equation explains that if company assumes that all variables have kept constant, if it invests a single dollar in the consumer packs of the company then it would increase its sales by 0.85 cases. However, this will also result in the decrease of sales by 0.45 for a single month. Therefore, this would lead to an increase of 0.4 cases in a month. However, while considering the scenario for the dealer allowance, if a company invests a sing dollar in dealer allowance then it will increase the sales of Treat by 0.68 cases which would ultimately decrease the future sales by 0.18 cases for the two months. Therefore, the net sales would have an increase of 0.18 case per single dollar investment.

However, the regression equation also carry discrepancies as it does not enable the company to consider other factors which includes the prices of its competitors, substitute available in the market, compliment products available in the market, the variations in the level of income and other factors. Therefore, if these variables are also considered in the sales forecasting techniques then it would result in more accurate forecasting of sales........................

Harmon Foods, Inc Case Solution

This is just a sample partial case solution. Please place the order on the website to order your own originally done case solution.

Forecasting and shipping was planning and budgetary constraints. Multiple regression is proposed as a solution. Estimates of regression coefficients leads to a better understanding of trends, seasonality, and promoting efficiency. "Hide
by William B. Whiston Source: HBS Premier Case Collection 7 pages. Publication Date: December 1, 1970. Prod. #: 171248-PDF-ENG

Other Similar Case Solutions like

Harmon Foods Inc.

Share This