The data collected from the excel spread sheet shows a close relationship between that is positive correlation between the penetration and purchase duplication on all the brands. In the scatter plot chart the y representing the purchase duplication which in the equation = 1.98 and the x representing the penetration which is demonstrated by r-square being 72.9%. This relationship of a positive correlation nature as when one variable increase the other variable also increases and when one variable decreases the other variable also decreases. By looking at the data provided in the excel it is clearly show that the duplication decreases from left to right columns from BB standards all the way to Aztec, BB standard being the highest with 78 and Aztec being the lowest with 6 in the average duplication. This decrease can be the result of consumers preferring to purchase from big rather than small brands. (See appendix 1)
The result collected from the scatter plot shows an average duplication represented by the y-axis =72.9% and the penetration represented by x-axis=1.98. According to this data, every increase in penetration will equal double the increase in duplication. An example from this case would be if BB standards increase their market share by 5%, the duplication of this by other companies will be approximately equal to 10%. A result of other company’s trying to expand their market share too. Which is summarized by “Duplication= 2x penetration”. (See appendix 1&2)
Question3: what is the average duplication and average penetration for the brands in this table?
By looking at the spread sheet data, it clearly shows the average duplication and average penetration of all the brands. In the average duplication row, BB brands have scored the highest with a proportion of 78%. Second and third are, BB Murphy and ETA O’Ryans with a proportion of 43% each. Fourth and fifth are Kettle fries with 37% and BB twisty with 30% in proportion to the average duplication. Sixth and seventh are, ETA Munchos and BB Biguns both scoring a proportion of 28% of average duplication. Then comes Burger rings and CC’s with the proportions of 27%. Lastly are, Sanchos and Aztec with 18% and 6%. Below is a table of the calculated average duplication and average penetration for all the brands.
Question 4: what is the purchase duplication coefficient for this data table
The answer of this question can be calculated by dividing the average duplication of all brands which is 33 by the average penetration which is 14.33 which result in presenting the duplication coefficient of 2.32. The coefficient duplication helps in determining the most suitable combination to result in a high output. In addition the coefficient duplication can show which combination between two products will most likely result in high purchase by the customers. In determining which combination of products attracts the customer the company can make critical decisions to which products to combine as an output. However, the coefficient in this case is considered fairly low which could be a result of customers not differentiating between brands. (See the below table)
AVG DUP-all brands
The figure of duplication coefficient which is 2.3 can be used to create the expected duplication for each brand. The expected duplication can be calculated by multiplying the penetration of each brand by the purchase duplication coefficient. By looking and comparing the data in the spread sheet of the duplications and the actual figures of products and brands, it shows that the customers of BB Murphy are the ones expected to benefit most by the duplication of coefficient due to their high proportion of expected duplication of 47% and Aztec’s customers being the least expected to benefit from the combination of products with a proportion of 6% according to the duplication coefficient.Question 5:
Question 6 :
The reason for differed duplications in brand purchases is due to many reasons in a usual case of a market with noticeable differences in brands whether its brand loyalty or brand image or simply just general differences in the consumer taste. However, in the case of a market with no marked functional differences it is expected for the duplications to occur in the purchases of each company in that market. The reason for that is simply the consumer having no to low loyalty to a brand or a product. In this situation the expected penetration is considered fairly easier than the penetration of a market where a there is a differentiation between brands and loyalty is high to the leading companies in that market. However in the given data of salty snack the law of double jeopardy applies as the purchases differs significantly between the brands as we can notice from the spread sheet. The brands of lower market shares such as Aztec’s average duplications of 6 is considered to have low buyers and low brand loyalty when compared with bb standards which is the highest company with the number of average duplication of 74. In addition, when looking at the overall average of products the average purchase of potato duplication for the three groups are 42, 57 and 51 for all the brands. This shows that in an average the chance of customers buying any product of salty snacks 50% will purchase potato products, while 30% will purchase extruded products and only 22% of all salty snacks customers will purchase corn products. Moreover, while customers that purchase extruded products are most likely to also purchase potato products, they are considered the most loyal customers this is demonstrated in the high duplication 57 in the extruded products. Also, corn consumers are ranked second in loyalty as the duplication level 51 is higher than that of potato product’s duplication which is 42. This means that although extruded purchasers prefer extruded products even though they may purchase other products. On the other hand, when looking at the data of the brands to compare specifically the chance of deviation or brand switching which is expected from customers with low loyalty to the product or the brand, BB Standards Company has the highest level in positive deviation 34 when comparing the expected and the duplication average. This means those BB standards customers are more likely to deviate or switch brands. Sanchos however, has scored the highest negative deviation -9, meaning that Sanchos customers are highly unexpected to switch to other brands which show some degree of loyalty to the company. In conclusion, customers in the data purchase different types of products regardless of the brand name which is demonstrated above in BB being the highest in penetration but also highest in positive deviation which may result in brand switching.
The calculation of average proportion for each product (potato, extruded and corn) has demonstrated that 1.8 of potato snacks customers will also purchase extruded products and a proportion of 1.6 potato purchasers will also purchase corn products. Meaning, potato products purchases has a higher tendency to purchase extruded product than corn product. However, the extruded customers that purchase potato products are estimated in a proportion of 2.2 and the number of extruded customers purchasing corn product estimated in a proportion of 3.7. Meaning that, extruded product customers have a high tendency to purchase corn products rather than potato products. A conclusion is that potato products purchasing customers are the least loyal customers to the brand or the product and corn product customers are considered the most loyal.
Question 8: Interpret the meaning of the figure of 3.7 under the ‘Corn’ column.
The duplication coefficient spread sheet data demonstrates the average penetration of each product type (potato, extruded and corn). It also shows the tendency of customers of a certain product purchasing different products. The figure of 3.7 interprets not only the average penetration of corn product but also the average of extruded purchasing customers tending to purchase corn products. This shows that the loyalty level of extruded purchasing customers are fairly low as there is a strong chance that extruded purchasing customers will also purchase corn products. That being said, the chances of extruded customers also purchasing potato products is 2.2, which demonstrate the likely hood of extruded purchasers buying corn products are high in comparison to potato products. (see attachment 5)
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The above questions and answers demonstrate the advantages and disadvantages of each product type whether its potato, extruded or corn. It also shows the consumer loyalty levels toward each brand and product. The decision and conclusion discussed below are all based on the facts collected from the data provided in the spreadsheets attached to this document.
As a manager of Burger Rings launching a new product and deciding the best product type whether its potato, extruded or corn keeping in mind that margins and profitability are the same in each sub-market. The choice of the new product would be a potato type product which is called Cruchos. There are many factors that were taken under consideration when deciding the right type of the product. First, the fact those potato products have the largest customer base. The fact is 50% of all customers purchasing salty snacks would purchase potato type snacks which is also demonstrated in the penetration percentage. Second, the fact that customer’s loyalty in the market are low towards the brand, as potato purchasing customers are considered the least loyal to a brand and have a high tendency to purchase extruded products and corn purchasing customers are considered the highest. Third, the Burger Rings company has a negative deviation or brand switching likely hood in comparison to potato producing companies which have high or non negative deviation, meaning potato companies suffers from either low to none brand loyalty. Therefore, there is a big chance of potato purchasing customers to switch from strong competitors products to the new product of Burger Rings. Fourth, the fact that in the market duplication =x2 penetration. Meaning that if the strong companies increase their market share by 1% chances are the duplications of weaker companies will equal 2%. That being said even thought Burger Rings is considered a small competitor in the new market, when the strong competitor increase its market share Burger Rings will have the chance to duplicate. Thus, using the current market condition in its advantage.
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While all the mentioned above factors create a suitable market for Burger Rings to enter. The Burger Rings company will need to undertake several steps in order to ensure the company’s success in the market. Some of these steps are; first, using marketing tools in order to differentiate the company from its competitors to decrease deviation and brand switching. This step is fairly important as the customers of potato type products are considered to have low loyal to the brand name a good example is BB standards as they have a high rate of penetration but a positive deviation. Second, increase the product quality which will lead to increasing the demand. While the potato product line is considered suitable to enter with the new product, it is noticeable the market is highly strong as BB standards are considered the leader in market share and other companies are well positioned the market. The company should use the positive deviation level to increase their customer’s base by offering high quality product which in its way will increase the demand. Thus, establishing a brand name in a market that lacks brand name loyalty which will increase the market share of the company.