Sample annotated bibliography

1. INTRODUCTION

The purpose of this assignment is to develop essential business research skills such as
locating relevant sources of information, interpreting and critically analyzing secondary data.
The literature review, as an important step in the research process, helps to develop
research questions and to enhance knowledge on the chosen topic. The research must be
focused on improving business decision-making by addressing existing information gaps
(Hair, Celsi, Money, Samouel, & Page, 2016).

As a case, there has been chosen a problem of the ice cream demand forecasting. Although
probably everyone knows that the ice cream sales are weather-dependent, it is still difficult
for companies to escape inventory problems, which result in significant losses, caused by
out-of-stock events or excess inventories. As logistics know-how is the one of the major
sources of competitive advantage, the practical application of the solution will be beneficial
for the research sponsor. Because different regions can have specific supply, demand and
weather patterns, the research scope needs to be narrowed to a certain market, which can
be studied as localized area with minimal outside influence, that is why the New Zealand ice
cream market is suggested. Another important consideration about the topic is the research
focus on seasonal-related factors, without investigation in the marketing field. Therefore,
the research topic can be defined as the consideration of seasonal-related factors in demand
forecasting for the New Zealand ice cream market.

To address the problem there has been proposed a research design, based on causal analysis
of the relationships between sales and seasonal-related factors. The term seasonal-related is
used, because there is an assumption that the impact of physical characteristics of the
weather can be levelled to certain extent by the influence of certain psychological factors.
Therefore, to make the research theory-driven, the existing knowledge about influencing
factors and appropriate statistical models needs to be investigated.
2. ANNOTATED BIBLIOGRAPHY AND CRITICAL APPRAISAL

2.1. Scholarly Journals

Stulec, I. (2017). Effectiveness of weather derivatives as a risk management tool in food

retail: The case of Croatia. International Journal of Financial Studies, 5(1), 2.
doi:http://dx.doi.org/10.3390/ijfs5010002

The author of this research analyzes the impact of unpredictable demand fluctuations
related to minor deviations of the weather conditions on retail industry, by studying sales of
non-alcoholic beverages. Stulec emphasizes the fact that this problem was previously
considered by academic researchers in relation to the agriculture and energy sector, rather
than fast-moving consumer goods (FMCG).

The research is based on quantitative data included in the multiple linear regression model,
which has two major strengths. First, it is a two-dimensional model, allowing to analyze
more informative data set by combining cross-sectional and time-series analyses. Second, it
enhances traditional causal analysis of weather impact by introducing additional
independent variables such as days of the week to represent consumer shopping habits.

However, several limitations can be found in this study. First, the main objective of research
was to link the impact of weather risk to the effectiveness of application of certain financial
tools, therefore the study was not focused on the complexity of customer behavior and,
therefore, cannot be used for more sophisticated demand forecasting. Second, the
conclusion is simplified by describing the only one independent variable, temperature.

Overall, despite its limitations, the research has positively contributed to the issue by
identifying the factors and sample methods, which are specific for seasonal consumer goods
demand analysis.
Murray, K. B., Muro, F. D., Finn, A., & Popkowski Leszczyc, P. (2010). The effect of weather
on consumer spending. Journal of Retailing and Consumer Services, 17(6), 512-520.
doi:https://doi.org/10.1016/j.jretconser.2010.08.006

Contrasting to the previous work, this research puts an accent on psychological nature of
consumer decision making. The most important finding in it is that the weather does not
affect spending directly, but rather affects the mood of the consumer, whose willingness to
pay increases when atmosphere conditions become better. The authors further narrow the
topic, arguing that the impact of the weather on consumer behavior is mainly caused by
sunlight. The latter is used as the main independent variable under study. It is important to
notice, that as a dependent variable the researchers use spending, focusing on people’s
unconscious readiness-to-spend money.

The authors reinforced their arguments by conducting three studies, based on different
research methods, which taken together reduce bias and triangulate conclusions.

However, the chosen dependent variable is questioned. The research could have been more
comprehensive if in addition to spending authors had used willingness-to-enjoy good, which
consumers associate with good weather and positive mood. It would have also enhanced the
practical application, if the researchers had considered consumer’s physical state, influenced
by weather conditions, and needs related with that.

Despite the orientation on spending, this research is beneficial, because it extends the
understanding of the factors, affecting demand, beyond the simple idea of temperature,
introducing the variables of sunlight and mood.
Bahng, Y., & Kincade, D. H. (2012). The relationship between temperature and sales.
International Journal of Retail & Distribution Management, 40(6), 410-426.
doi:http://dx.doi.org/10.1108/09590551211230232

The purpose of this research is to study the effect of weather on sales of clothing. The
authors’ key finding is that there are some categories of seasonal goods where consumers
postpone purchases, because of the weather, but ultimately buy goods.

The quantitative analysis is based on descriptive statistics and supported by additional

interview-based qualitative research.

A significant research shortcoming is a limited dataset, which does not allow to reinforce its
conclusions by making comparative analysis over several years. Moreover, it is narrowed to
temperature variable only, which can be considered insufficient compared with the other
works.

The research conclusions about complex nature of demand regarding different categories of
seasonal goods provides the insight that there are some factors, related to consumer
decision making, such as postponement, which can level the influence of weather factors.

Arunraj, N. S., & Ahrens, D. (2016). Estimation of non-catastrophic weather impacts for retail
industry. International Journal of Retail & Distribution Management, 44(7), 731-753.
doi:http://dx.doi.org/10.1108/IJRDM-07-2015-0101

This research combines the food and non-food retail stores experience to evaluate the
impact of the weather on footfalls and sales performance. As a specific feature, it uses two
dependent variables: sales volume and store traffic. Contrasting to other pieces of work, this
study provides a detailed conceptual model, describing relationships between weather
conditions and their main effects such as hinderance, mood, and seasonality, which generate
sales and traffic. The important finding of the research is the set of consequences, caused by
the weather conditions, including different aspects of consumer decision such as amount,
frequency, assortment, place, time, and mode of purchase.
The analysis of relationship is based on multiple linear regression with autoregressive
elements, allowing to study autocorrelation of influencing factors, which is the distinguishing
strength of the work.

The authors identify very important limitations in their report, which should be considered in
further research, such as noise in data, caused by promotion activities and tourists
migration.

Overall, the authors provide useful conceptual model, confirming that the combination of
different weather conditions affects many aspects of consumer decision. Their conclusions
lead to the idea for the future research, that the seasonality can be used as an independent
variable.

Arunraj, N. S., & Ahrens, D. (2015). A hybrid seasonal autoregressive integrated moving
average and quantile regression for daily food sales forecasting. International Journal
of Production Economics, 170, 321-335.
doi:https://doi.org/10.1016/j.ijpe.2015.09.039

In this work authors emphasize the high level of uncertainty, which can lead to errors in the
analysis and forecasting of sales. To better understand the issue, there has been provided
the comprehensive classification of factors influencing sales, that need to be considered
when developing regression models for causal research. The authors also suggest
considering more than one statistical instrument, because different data sets can have
different parameters influencing applicability of a certain forecasting model.

The interesting finding of the report is the proposal to introduce seasonality as a dummy
variable, such as month-of-the-year, which can be considered either positively or negatively
influencing factor, depending on consumer perception of the season. This can be a dipper
analysis in comparison with that, where only mere weather conditions are used, because it is
known, that the same temperature in the beginning and in the end of the season is usually
perceived differently by consumers.
As the reviewed work targets forecasting problem, but not the relationship study, it cannot
be directly used for the future research, however, it provides major insights for the
developing the research proposal.

2.2. Gray literature

Canadean. (2017). Ice Cream Market in New Zealand: Market Snapshot to 2020. Basingstoke:
Progressive Digital Media. Retrieved November 3, 2018, from
https://llcp.nmit.ac.nz:2526/docview/1872816161?accountid=40261

The report provides results of the New Zealand ice cream market research presenting the
actual sales data for 2015 and forecast for the period 2016-2020. The report reflects the
domestic sales only.

Propose the dividing the ice cream group into subcategories, such as artisanal, impulse, and
for-home-consumption ice cream with a clear explanation of the classification.

However, some quality aspects of the research are questionable. The quantitative data has
not been gained from real companies’ databases, but rather the estimation based on
interview process. Moreover, it Does not give figures describing seasonality of those
subcategories.

Therefore, the division into subcategories will be necessary in the future research, and the
sales must be analyzed separately, because their demand follows different patterns. For
example, the impact of weather condition on impulse ice cream is potentially more affected
by weather, because it assumes immediate consumption, whereas that of take-home
desserts can be postponed and less weather-dependent.

The New Zealand Ice Cream Manufacturers' Association. (n.d.). The New Zealand ice cream
industry. Retrieved November 4, 2018, from The New Zealand Ice Cream
Manufacturers' Association: https://www.nzicecream.org.nz/industry.htm
The New Zealand Ice Cream Manufacturers' Association provides information on the
country’s ice cream market overall, giving the information about the consumption level per
capita as well as the comprehensive description of market history, major events and trends.

The website, however, cannot be used as a satisfactory source of quantitative data needed
for the research, such as seasonality or market shares, because it does not provide such
information.

On the other hand, it can be used as a source of information, allowing to acquire the
knowledge about the market specific features and to gather information about the ice cream
manufacturing companies as well as brands and tastes.

One of the key valuable findings made from this source is the confirmation, that New
Zealand is a specific local producers-dominated ice cream market with a relatively stable
supply structure and the world’s highest level of ice cream consumption. This makes it a
unique unit of analysis, ideal for further research.
3. SECONDARY DATA

The National Institute of Water and Atmospheric Research. (2018, November 4). The
national climate database. Retrieved November 4, 2018, from NIWA:
https://cliflo.niwa.co.nz/

The website represents the New Zealand national climate database, prepared by the
National Institute of Water and Atmospheric Research (NIWA). This secondary source
provides a comprehensive set of weather conditions data, which can be retrieved in a raw
format or in forms of statistical data summary. The database query engine allows to
customize set of weather attributes and receive information collected with daily, hourly, and
ten-minute frequencies.

Although there are several other opened Internet sources, providing access to weather
archives, this is website can be considered as one of the most reliable, being funded mainly
by the Ministry of Business, Innovation and Employment (The National Institute of Water
and Atmospheric Research, 2018). Moreover, the resource allows to use quantitative data
collected from more than 600 stations across the country.

The web-service, however, provides access to the information with several limitations. First,
data can be accessed on subscription base, where there are some restrictions regarding the
number of downloaded rows with data and the terms and conditions of further data use.

Overall, this source is considered as appropriate and reliable and can be effectively used in
the research.

The ice cream selling company. (2017). Sales report.

This is an essential source of quantitative data, allowing to build regression model needed to
understand relationships between seasonal demand drivers and sales. If the company,
providing access to this information, is a research sponsor, then this will be an example of
internal sources, whereas weather data, retrieved from NIWA’s database, will be external.
The ideal dataset must be based on figures, gathered from retailers, because manufacturing
or distributor sales data does not reflect information about the real consumption, but rather
can be considered inventory replenishments within the supply chain. Using replenishment
information can introduce bias, because the inventory operations do not precisely reflect
actual demand.
4. CONCLUSION

Based on the initial topic introduction there has been made the analysis of the existing
knowledge about seasonal-related factors influencing demand and appropriate
mathematical models and methods to address the research problem.

It was found that the seasonal ice cream demand has not been widely studied in academic
researches, but it requires specific set of factors to be included in the model.

One of the literature review outcomes is the evidence of proven causal relationship between
consumer mood, behavior, and demand. Although this phenomenon has a strong correlation
with the weather, it has more sophisticated nature and can in some situations act more
independently and level the weather impact on demand.

The temperature is not the only significant variable in the model. The previous researchers
have proved that the sunlight can be even more influencing factor, and variables have a
certain level of autocorrelation, therefore the mixture set of variables must be used.

The New Zealand ice cream market can be considered as a perfect unit of observation due to
its stable structure and high level of consumption. The further research requires two
datasets providing corporate sales data and weather information, which relationships must
be analysed by the implementation of regression models.