The Implication for Brekky Brand, Brand Performance Metric, Duplication of Purchase - Assignment Example

Brand Sales $10,000 Sales on promotion $10,000 Market share% Market share% when promoted Rank Rank when promoted Kellogg's 77.21 55.36 21.2 12.0 1 7 Nestle' 64.27 56.46 17.6 12.2 2 4 Brekky 58.56 60.92 16.1 11.9 3 8 Sanitarium 38.80 57.69 10.7 12.2 4 5 Carman's 36.45 58.93 10.0 13.8 5 1 Lowan 32.66 51.23 9.0 12.7 6 3 Private labels 31.69 64.89 8.7 12.1 7 6 Uncle Tobys 24.63 55.92 6.8 13.1 8 2 Average 45.53 57.67 - - - - Total 364.27 461.39 100.0 100.0 - - Regular and promotion sales The table below shows the data for sales of regular or basic sales and sales with promotion. There are three different regions which shows the brand sales on the market. It is expected that during promotion season, there should be high sales and low profit however. Price promotion according to Blatterberg et el., (1995), is reduction of the prices temporary offered to the Table 1.0 sales data for Brekky during the month of Jan-Aug 2010 consumer. To be able to evaluate the performance of any promotion, the baseline performance of the brand (Abraham and Lodish 1993). This resulted to having data of the two type of sales to ensure that the promotion performance is measured for Brekky. The sales were simplified further for easy analysis for Mrs. Bossy. The table above indicates that there is overall total sales during the promotion period was higher compared to normal sales. There is also an indicator that the market share also increased. However, the promotion more sales in some products than the normal sales, this indicates that not all products positively impact on the products from the organization. During the sales in the first region, the biggest sales during normal sales is Kellogg’s while Nestle was the biggest during promotion period. Kellogg’s, Lowan, Brekky and Private Lables have not increased market share after promotion. The main aim of sales promotions as a strategy in marketing to raise the sales temporarily is to increase sales and gain market share. The marketer should not base on the initial impact of promotion but look at the future impact. The business owner should not base only on price promotion as the factor to increase sales. From the above data market share and sales does not only base on the price reduction but other factors such as competitiveness of individual brands in the market. The sales volume has increased with sales promotion but the overall market share. Price promotion therefore, does not work or greatly affect all the products because some product’s sale did not go up as expected. Comparison of regional sales Table 1.2 total sales value Pie chart 1.0 regular sales Pie chart 2.0 sales during promotion The data above the shows the total sales of all the brands by Brekky on sales without promotion. Region 1 and region 3 had same sales percentage 33%. Region 2 had the highest of 34%. While the sales in the region during promotion for the two region that sold the least improved region 1 and 3 had 34% sales while the sales for region 1. Price promotion in some regions may have not had effect if other stores also did the same promotion during the same period (Lieberman 1981). Eskin and Baron (1977), points out that sales volume in a given area may result into negative price-advertising where the sales of the company goes down. This can be the explanation reduced sales in region 2 during the promotion time, such cases results into high expenditure. Gedenk & Neslin (1999), asserts that promotion does not scale down the market share for a long term. Generally there is increased sale in all the regions during promotion period compared to normal sales period. Question 2 a. Brand performance metric (BPM) Brands No. of buyers market Share % Share of category req. Sole loyalty % Penetration % Purchase frequency Kellogg's 1804 27.0 46 27 30 4.6 Nestle' 1350 20.0 43 25 23 4.5 Brekky 1113 15.0 38 26 19 4.1 Carman's 786 10.0 37 21 13 3.9 Sanitarium 671 6.0 36 20 11 3.9 Lowan 562 8.0 36 22 9 4.1 Private labels 547 8.0 35 20 9 3.8 Uncle Tobys 465 6.0 33 21 8 3.7 Total 7298 100 304 182 122 32.6 Average 912 13 38 23 15 4.1 Table 2.0 BPM The tabulated figures above show the brand performance metrics based on sales for 5949 customers, the size of any brand is examined by looking at its penetration performance( Ehrenberg et al., 2004). The brand with highest market share is the Kellogg the share of 27% and penetration of 30%. The second largest market is the Nestle’s brand with 20% market share and 23% penetration of the market. While the Brekky was the third largest market share which had 15% market share slightly above the average score. The largest brand sold on the market for the breakfast cereals. the frequency of purchase for a product, share category, solely loyal are the determinant factors for brand loyalty. The share category requirement had 46% for Kellogg’s while Brekky had 38% share of category requirement which similar to the average 38%. It is important to point out that Brekky brand was sold all of it that was allocated to the buyers. Brekky also has the highest sole loyalty of 26% 1% less than the brand with the highest makert share Kellogg’s. the frequency of purchase has an average of 4.1 which is similar to the purchase frequency of Lowan and Brekky 4.1, it implies that a single buyer purchases Brekky 4.1 times which is an average of all other brands. Brands with higher market share have high sole loyalty percentage and high penetration level the table shows that Kellog’s Nestle and Brekky have higher market share above the average market share of 13%. There are many buyers and higher loyalty for the top three brands with larger market share. Lower market share for brand such as Private labels and Uncle Tobys have lower loyalty of 8% and 6% respectively and lower buyers of 547 and 465 compared to higher market share brands which have over 1000 buyers hence Double Jeopardy pattern exists. McPhee (1963), asserts that Double jeopardy is an empirical result. Where smaller brands have fewer buyers therefore there is lower sole loyalty. Double jeopardy is expected to occur in many product given that it is the basic statistical effect. The graph below shows that Double jeopardy exists Fig 2.0 BPM Duplication of Purchase. The general pattern is established in a line graph if there is a sequence such that decline in penetration results to decline in average duplication (Ehrenberg, 1988). Duplication of Purchase Law can be used to compare how brands compete with each other on the market. The substitution of brands in duplication of brands is directly proportional to their penetration, this implies that brands with higher market share compete closely with other big brands compared to smaller brands(Ehrenberg & Uncles, 2000). It is therefore important to have duplication of purchase because it enables us to understand how brands compete with each other and we can be in a position to establish the complementary or competitive the brands(Ehrenberg 1988). Brand also bought Kellogg's Nestle' Brekky Carman's Sanitarium Lowan Private labels Uncle Tobys Kellogg's 30.3 24.0 17.5 14.4 11.8 12.6 10.4 Nestle' 40.4 24.4 16.8 14.5 13.3 11.8 10.4 Brekky 38.9 29.6 18.1 15.1 12.2 11.1 10.2 Carman's 40.2 28.9 25.6 16.3 12.1 12.8 8.5 Sanitarium 38.7 29.2 25.0 19.1 12.1 11.9 11.2 Lowan 37.9 31.9 24.2 16.9 14.4 11.6 10.9 Private labels 41.7 29.1 22.7 18.5 14.6 11.9 9.3 Uncle Tobys 40.4 30.1 24.5 14.4 16.1 13.1 11.0 Average 39.8 29.8 24.3 17.3 15.1 12.3 11.8 10.1 Table 2.1 duplication of purchase The duplication of purchase law confirm the empirical generalization which states that decline in market penetration affects brand sharing, where larger brands compete favorably/closely with other larger brands than smaller brands. This provides the marketer with the knowledge to identify potential competitors hence have a proper marketing strategy to improves sales. Implication for Brekky brand There are two largest brand on the market in terms of market share, which compete closely according to the two basic market rules Double jeopardy and Duplication of purchase. There is a stronger sole loyalty and number of buyers for the two products. For Brekky to be able to establish higher market penetration increase in sale performance by improving the sole loyalty is an important factor. The consumer behavior is that they will buy goods that are popular and more pronounced on the market even if they are meeting them for the first time. Brekky as third brand should be given proper marketing strategy to increase the sale and have higher loyalty of the brand to be able to compete closely with other brands. Question 3 The p and q values are provided in excel program which is meant to establish new cereals products targeting kids in the market. The innovations are meant to attract more kids to the new product. Looking at the p and q values of the relevant products to the new product to be rolled out in the market. Bass model is meant to establish the variant of the new product before realizing them to the market. From the excel data the table below shows relevant information that Mr. Bossy needs to forecast the future market. Mc Donald’s fast food, Water softner and Hybrid corn are products that need to be analyzed by Mrs. Bossy because she wants to run new products that target kids. Product category p q Mc Donald's fast food 0.02 0.54 Water softner 0.02 0.30 Hybrid corn 0.04 1.01 5,000 The coefficient of innovation P and imitation coefficient q are tabulated above for the three products and the potential buyers of the new product. The values of q are greater than the values of p hence this are product of imitation commonly referred to as ‘sleeper movie’ given that it will take to gain presence in the market. This implies that the new products for kids will not catch the attention of the target buyers rapidly but they will require time. However, the new features such as cartoon shaped package and other innovations such as rewarding a toy for any purchase of the new product is a nice marketing strategy and the high fibre content with organic ingredients are the best for most parents for their kids. This shows that once the products gain presence in the market they will be the preferred products on the market. This forecast however is not enough for Mrs. Bossy to endorse the new product plan hence scientific method is necessary. The Bass Model will be used to establish the market performance of the new product. Which is given as n(t)=pN+(q-p)N(t)-q/N[(t)]2 where; n(t)=number of adopters at time t. P=coefficient of innovation which explains that external influence such as customers choose to purchase on their knowledge. q=coefficient of imitation which indicates internal influence like customers choose to purchase based on the experiences of other purchasers. Time New Adoptions Cumulative 　 Observed Theoretical Theoretical t 　 n(t) N(t) 1 125 0 2 197 125 3 303 322 4 446.7698 624.9381 5 617.7190 1071.7079 6 773 1689 7 835 2462 8 735 3297 9 506 4032 10 270 4538 11 119 4808 12 46 4927 13 17 4973 14 6 4990 15 2 4997 16 1 4999 17 0 5000 18 0 5000 19 0 5000 20 0 5000 21 0 5000 22 0 5000 23 0 5000 24 0 5000 25 0 5000 26 0 5000 27 0 5000 28 0 5000 29 0 5000 30 0 5000 The graph illustrates that the value of q is greater than that of p hence the three products belong to the sleeper model. The new product will increase rapidly in its launching of the first 5 years. The 5th and 6th year will be a year where the sales will remain constant no decrease or increase afterwards the sales will decrease until the 13th year where the sale drops to zero. Innovation is an outside stimuli which is as a result of marketing the products unique features (Nielsen, & Media, 2012). it will therefore be wise if Mrs. Bossy invest much in advertising to ensure that parents who are potential customers know the fiber and organic ingredients in the new cereals for kids. The other features such as the cartoon package style will attract more kids in buying the product. Sales promotion or media advertisement will be the most important factor for success in the new products. References Ehrenberg, A. S. C. (1988). Repeat-buying: facts, theory and applications. London, Oxford University Press. Ehrenberg, A. S. C., J. Bound and B. Pouilleau (1999). Customer Retention and Switching in the Car Market, South Bank University, London and Bull, paris. Ehrenberg, A. S. C. and M. D. Uncles (2000). Understanding Dirichlet-Type Markets. London, South Bank University and University of New South Wales (www.sbu.ac.uk/RandDI/Publications). McPhee WN (1963). Formal Theories of Mass Behaviour New York: The Free Press of Glencoe. Nielsen, L, Media, D 2012, ‘The effect of sales promotion on sales volume’, Chron.com, viewed 26 April 2012, . Read More