Case Study Solution

Vishleshan 2013(R1)

Team: Communicators

Suprotim Rao Vrinda Bhagat

Symbiosis Institute of Media & Communication, PuneMBA (Communication Management)

The case was about a company whose sales were dependent on many factors. Analytics and research functions were used to interpret the numbers.

Tests were run using excel and SPSS

MARKET SHARE of B1 GETS

IMPACTED BY

MEDIA SPENDS

DISTRIBUTION

AVERAGE PRICE

BAR

LIQUIDOUR BRAND B1

COMPETITOR C6

B1 BAR

COMPETITOR

B1 BAR

COMPETITOR KEY FINDINGS

As per given data, these are the only factors impacting the market share of B1. No other factors are taken into consideration.

Approach

The statistical methods that will be used in diagnosing the reasons for market share loss are:

• Correlation : It will tell us how strongly and in what way the sales of B1 bar is affected by the given independent factors, viz average price of B1 and competition, distribution of B1 and media spends of B1 bar, B1 liquid and competition C6.

Effect of PRICE on SALES

Correlation between Value

Sales value of B1 & Average Price of B1

0.96

Sales Volume of B1 & Average Price of B1

0.23

•There is a strong and positive correlation between sales value of B1 and its average price. On reducing the price, its value will also decrease.

•Also, the sales volumes of B1 bar and its average price are weakly(positively) related. Thus, decreasing price will either not affect sales in volume or decrease the sales volume of B1 bar. It will certainly not increase the sales volume of B1 bars.

Assuming market share maximization to be the objective, we would advise not to decrease the price of B1. Thus, hypothesis 1 is negated. Reducing price of B1 will not increase its market share.

Effect of MEDIA SPENDS on SALES

Hypothesis 3 partially holds true. The return on sales of C6 (value and volume) in terms of media spends is better than that of B1. We recommend to focus on the effectiveness of media spends of B1 bar. Also, media spends of B1 liquid do not have positive impact on sales (value and volume) of B1 bar, thus negating the gut feel.

Correlation between ValuesSales Value of B1 bar & Media Spends of B1 bar 0.58

Sales Volume of B1 bar & Media Spends of B1 bar 0.41

Sales Value of C6 & Media Spends of C6 0.67

Sales Volume of C6 & Media Spends of C6 0.61

Sales Value of B1 bar & Media Spends of B1 liquid -0.29

Sales Volume of B1 bar & Media Spends of B1 liquid -0.18

•There is a good and clear correlation between sales value of B1 bar and its media spends.•However, the trend is not similar for the sales in volume of B1 bar.

•Speaking of Competition (C6): - The media spends of C6 has a fairly strong and positive correlation with its sales value . - The media spends of C6 has a fairly strong and positive correlation with its sales volume. Thus, C6 is effective in its media spends.- On decreasing the media spends of B1 liquid, the sales value of B1 bar increases, however it is not affected much. - Also, on decreasing the spends of B1 liquid, the sales volume of B1 bar increases, but it is not affected much.

Effect of DISTRIBUTION on SALES

Yes, Hypothesis 4 is compelling. Distribution is getting affected by the average price of B1 bar. Assuming revenue maximization to be the objective, it is advisable to decrease the average price.

•There is seen a strong and negative correlation between sales value of B1 and its distribution. On increasing the sales value of B1, its distribution is reducing.

•Also, there is almost no correlation of sales volume with its distribution. By increasing the distribution percentage of B1, the sales volume is not getting affected .

•There is also a strong negative correlation between average price of B1 and distribution of B1. Thus, when the average price of B1 is increased, its distribution decreases. (This can be translated into the fact that not all distributors are willing to stock a high price product.)

Correlation between Value

Sales Value of B1 & Distribution of B1 -0.75

Sales Volume of B1 & Distribution of B1 0.013

Average Price of B1 & Distribution of B1 -0.84

Competition Review

Correlation between ValueSales Value of Competition & its Average Price 0.94

Sales Volume of Competition & its Average Price 0.81

Sales Value of B1 & Average Price of Competition 0.87

Average Price of B1 & Average Price of Competition 0.93

Media Spend of C6 & Total Media Spend of B1 0.52

•Similar to B1 bar, there is also seen a strong and positive correlation between sales value of competition and its average price. On reducing the price, its value will also decrease.

•Contrary to B1 bar, a strong and positive correlation also exists between sales volume of competition and its average price.

•A strong and positive correlation also exists between average price of competition and sales value of B1. •Increase in average price of B1 will result in increase in average price of competition.

•Increase in media spends of C6 results in increase in total media spend of B1 (bar and liquid). (A noticeable correlation can be seen).

Thus, B1 needs to note that it is a highly competitive market. As average price of B1 increases, the average price of competition also increases. Also, It is seen to be a media sensitive market; activities in media of C6 tries to cannibalize the activities in media of B1.

Practical Significance

The practical significance of the statistical modeling used in the case is seen to be high in the following cases:

- Sales Value of B1 & Average Price of B1 (92%)

- Sales Value of Competition & Average Price of Competition (89%)

- Average price of B1 & Average Price of Competition (87%)

- Sales Value of B1 & Average Price of Competition (76%)

- Average Price of B1 & Distribution of B1 (71%)

Executive Summary

- The analysis has been done basis the data given. Any other factors (like competition of distribution, media spends of other competitors, sales data of B1 liquid etc) which were not mentioned but could have impacted the market share of B1 have not been taken into consideration.

- A few assumptions have been made regarding the objective of the business while diagnosing the reasons for market share loss.

- The market for household cleaning product is highly competitive, although B1 is clearly the market leader in this category.

- It is highly likely that if B1 increases its price, the others in the category are following suite.

-Increase in price of the competition also leads to increase in sales value of B1. This could be possible because either the sales volume of B1 is decreasing . It is also possible that the consumer is shifting to some other competitor as we are considering the average price of competition in this case.

-This category also gets affected by the media activity. Hence, it is important to increase the effectiveness of media spends of B1 as it is already a well known brand.

- Distribution if reduced in markets where B1 is already not sold much will not affect the sales volume of B1 .

- As B1 has a high penetration in the Indian households, it is important to prioritize the reasons for market share loss.