Market Analysis Assignment - Research Paper Example

Market Analysis Assignment Table of contents Market Analysis Assignment 1 Summary 2 Introduction 2 Fast moving consumer goods brand 2 Brand performance measures for tooth paste category 6 Choice-Based-Conjoint study 7 Conclusion 10 References 12 Summary This study consists of three sections with the first part giving a market analysis of fast moving consumer goods. The second part is an investigation on the performance of various categories of toothpaste. The last section gives a Choice-Based-Conjoint study a wine category. Introduction In order for a band to survive in the market there is need for the market to be studied so as to come up with strategies that will enable to compete effectively. The study of the market situation will help to make a decision on whether there is need to look for new markets or if within the current market there is still room of improvement. The first part of this study gives a scrutiny of the performance of a fast moving consumer goods brand which clearly indicates that the brand performance is declining and need to be addressed. Use of brand performance measures (BPMs) has been used in section two of the study in establishing the market position of a brand of tooth paste. In the last study choice based conjoint study has been used in the investigation of wine based category. Fast moving consumer goods brand From the table 1 it can be seen that the heavy buyers have decreased from 375 to 295 where the former figure represented 56.6% of the buyers in period 1 while the later is 44% of total buyers of the brand buyers. It is interesting to note that even after having a substantial contribution of non buyers joining the category of buyers the sales in the second period was still lower that in that of the first period. The fact that there were new buyers for the brand it is a clear indication that there could have been a substantial increase in buyers in the category including the buyers of other brands. This need to be a great concern to the manager because it could have an implication that the general market expanding while the brand market happens to be shrinking. It can also be observed from the table that the heavy buyers are very few for each of the number of purchases made. For example the buyers who bought 14 and 15 items were only 1 for each while there was no buyer who bought 13 items. It is also seen that for who bought 12 and 11 items were two for each case thus accounting for 29 sales (18 +11). This means that if there were about 6 for each of this group the sales in the group (12 and 11 item buyers) would have increased from 29 to about 87 (29x3). The situation can be put in context by considering relating to Dirichlet model. The model scrutinizes the buyer in terms of frequency of buying and their brand of choice. The inputs and outputs which are key to the model are the Brand Performance Metrics (BPMs) with the major purpose of having a clear understanding the model being in the interpretation of the variations between the observed and the theoretical BPMs. Under this model the double jeopardy can be used to relate to the market pattern where it is believed that there will always be a direct relationship between the brand size and the level of loyalty which is likely to be commanded by the brand. The implication is that if a brand has a larger share of the market it means it will have a better performance with more buyers with its brand loyalty being substantially high. Thus when the situation in the current situation is indicating that the customer loyalty is declining which could be a clear indication the brand is loosing market. the other observation in model is that “niche” brands which happen to be small brands commanding high level of loyalty and change of pace where brands which are large end up commanding low level loyalty are not common occurrence. This is an indication that the decline in loyalty for the brand should be a cause of an alarm there is minimal chance that the brand could be a good performer in the market while it is loosing loyalty. It is not very possible that the brand is loosing some of the customer to a niche brand which has a little impact on the overall market. The most likely scenario is that the customers are being lost to a big player (or a new emerging big player) in the market. While this could be a clear indication that there is need for concern more investigation need to be done to ascertain the extend of the problem. This means that there is need to find more data about the competing brands. This will go along way to establish if the brand is loosing its loyal customers to competing brands. Brand metrics can be considered to be the most effective tool available for use in the measurements of qualitative parameters in the level of performance of the brand in the market at a specific time and this can give the management to be able to measure how effective the brand building activity is considering the level of investment done. The brand metrics are to be understood to be building within a framework of some determining factors. It will be important for the company to have a clear understanding of the linkage between the perception of the brand, its performance and the financial impact so as to be able to function within the metrics process. The major aim of brand metrics need to aim at mapping yield loss scores putting into consideration losses and gains made by brands in terms of important market drivers such as retail sales, price sensitivity, consumer preferences, promotion of the brand trial effects , product attributes and the repeat purchasing behavior of the buyers. If the brand is to be successfully positioned within a category it will require measurement models that have the ability to disentangle the unique personality traits of the brand from those traits which are common to the other brands in the product category. At a point when the brand will be regarded to be successful, it will be able into the mind of the buyers very strong emotions, commanding a very high level of loyalty. The company might look into a possibility of developing a brands score card based on the analysis of the brand metrics. If a balanced score card is developed it will be possible for key behavioral dynamics which are linked to the brand to be measured and these would be compared with the competing brands. Shopper class Observed period 1 shoppers Observed period 1 sales Observed period 2 sales Non buyers 1760 0 0% 123 18.4% Light buyers (bought 1 unit) 106 106 16% 101 15.1% Medium buyers (bought 2-3 units) 77 183 27.6% 149 22.3% Heavy buyers (bought 4+ units) 57 375 56.5% 294 44.0% Total 664 100% 667 100% Table 2 The 1760 non-buyers in period 1 made 123 purchases in period 2. Number of purchases x Observed period 1 shoppers Observed period 2 sales 0 1760 123 1 106 101 2 48 87 3 29 62 4 14 56 5 12 46 6 9 36 7 6 34 8 5 27 9 2 20 10 3 27 11 2 18 12 2 11 13 0 0 14 1 9 15 1 10 Brand performance measures for tooth paste category From the results it can be seen the largest share market is possessed by Brand A which commands a share of 30.4% with a market penetration of 53.76 the brand under investigation has a market 21.6% with a market penetration of 40.24. It was also found from the analysis that there was no niche brands. The level of the market share clearly indicates that the market is far from saturation. In addition there is no loyalty to any of the brands and this is a clear indication that there is no particular brand which has completely one some customers on their side. This is a clear indication that if Virgil makes the right marketing decisions there can be improvement in sales without there being any need to looking for new market areas. It is also important, however to make do more marketing so as to increase the market share. This will ensure that the market penetration increases as the number of new consumers are registered. It is also important for the brand to be promoted so that it can have loyal customers. With the brand having more loyal customers the purchase frequency will be increased. Table 3 Brand Sales Market share Brand A 3066 30.4 Brand B 2169 21.6 Brand C 1351 13.4 Brand D 841 8.4 Brand E 429 4.3 Brand F 2172 21.6 Brand G 32 0.3 Total 10060 100.0 Choice-Based-Conjoint study In this question the utilities to be used are first represented as obtained from the data. The increase in utility as a result of price increase by $5in taken as -0.55. The increase in utility associated with well known to not well known brand is taken as -0.800 while the increase in utility from not well to not well known region is 0.01. The next step is the calculation of price and utility change which is associated with the changing price. The price change is important in the calculation of dollar value changes brand popularity and change from well known region to not known region. The dollar value of one unit change in utility is then calculated by division of the change in price by change in utility where all negatives are ignored. Thus the change is calculated as Value of dollar for one unit of utility = 5/0.55= 9.09 The nest stage is the multiplication of the value in dollars of one unit by the utility value which is linked to popularity of brand and the region of either well known or not well known. For popularity (Brand well known or not well known) = 9.09 x 0.8 = 7.27 Movement from not known region to well known region = 9.09 x0.01 = 0.09 The next step involves the calculation of the market shares for the 8 alternatives with the first step being the setting up of parameters. In all conjoin question Bo is given a 0 value with the other three parameters designated as B1, B2 and B3 this being a representation of utility values of the various attributes. A table with 8 alternatives is set with the rule of beginning the calculations being that the first alternative in the list is given a utility of b0 which basically has a value of zero. The second alternative is initialized with a utility of b0 followed by a comparison to the first alternative and figuring out the difference. Here, the price will be seen to remain low, brand will not change but region will change as indicated. The other values will be as shown in the table. Table 4 Price Brand Region X Well known Well known b0 0.0 X Well known Not well known b0 +b3 0.01 X Not well known Well known b0 +b2 -0.80 X Not well known Not well known b0 +b2 +b3 -0.79 X+5 Well known Well known b0 +b1 -0.55 X+5 Well known Not well known b0 +b1 +b3 -0.54 X+5 Not well known Well known b0 +b1 b2 -1.35 X+5 Not well known Not well known b0 +b1 b2 +b3 -1.34 The next step involves scaling up the utilities by use of exponential function. The obtained exponent numbers are then summed up to obtain the total of exponential as shown in the table. Table 5 Price Brand Region Exp(utility) X Well known Well known b0 0.0 1.00 X Well known Not well known b0 +b3 0.01 1.01 X Not well known Well known b0 +b2 -0.80 0.45 X Not well known Not well known b0 +b2 +b3 -0.79 0.45 X+5 Well known Well known b0 +b1 -0.55 0.58 X+5 Well known Not well known b0 +b1 +b3 -0.54 0.58 X+5 Not well known Well known b0 +b1 b2 -1.35 0.26 X+5 Not well known Not well known b0 +b1 b2 +b3 -1.34 0.26 4.59 In order for the final probability to be obtained each of the exponential values are divided by the total exponential value and then the probabilities are converted to percentages as shown. Table 6 Price Brand Region Exp Pro. Mrt share X Well known Well known b0 0.0 1.00 0.22 22 X Well known Not well known b0 +b3 0.01 1.01 0.22 22 X Not well known Well known b0 +b2 -0.80 0.45 0.10 10 X Not well known Not well known b0 +b2 +b3 -0.79 0.45 0.10 10 X+5 Well known Well known b0 +b1 -0.55 0.58 0.13 13 X+5 Well known Not well known b0 +b1 +b3 -0.54 0.58 0.13 13 X+5 Not well known Well known b0 +b1 b2 -1.35 0.26 0.06 6 X+5 Not well known Not well known b0 +b1 b2 +b3 -1.34 0.26 0.06 6 Totals 4.59 1 100 Conclusion This study has illustrated many aspects that need to be looked into when investigating the performance of a product in the market. It can be seen that having the correct data and using the data in the correct way is the key to making the right marketing decision. The process of looking into should be continuous because the competitors are always looking for new ways to improve on their market share. References Kalpan R. S. and Norton D. P. (1996). The balance scorecard-translating strategy into action. 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