7 product analysis
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Product AnalysisProduct Analysis
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Why numbers?Why numbers?
y School level maths needed
y
Quick and speedy feel for numbersy Usually to compare potential and success,
rather than accounts
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Market Trends
Market Trends
y Is Mkt size = penetration or frequency?
y
Nearing saturation or just openingpotential? Brushing teeth; wearing shoes
y Is mkt growing, shrinking or stabilising?
y Is it growing in volume but declining inRevenue/Profits?
y Competition increasing and driving pricesdown?
y Is growth gentle slope or fall steep?
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SeasonalitySeasonality
y Recurrent seasonality umbrellas, soft
drinks,A/cs should show up every year
y Reason should be understood
y Often distortion = trade over-reacts to aslight seasonality Baking cakes 10% more
in winter = Mfrs offer 20% more in summer= Trade buys 30% more in summer = Mfrsadvertise 70% more at start of winter toincrease consumption , while trade offers
deeper discounts to rid off stocks. Better toconcentrate on selling quietly in summermonths, rather than distort market.
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Brand SharesBrand Shares
y Are all brand shares constant or is yours
growing or declining compared to overallproduct?
y Is one more seasonal than others? Why?
y Are volume and value shares consistent
across brands or is one getting more?Maybe new brand gaining ground.
If revenue falling, though market numbersgrowing, maybe commodity pricing low
Opportunity to establish brand preference andpremium pricing
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Distribution
Distribution
y Distribution should be in line with brandshares
y Out of stock shd reflect across all brandsIf one lower than usual and often out of stock,maybe mfg bottleneck, not selling as well as it
shd
Maybe trade not woken up to demand for thatbrand
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Type ofS
toreType ofS
tore
Type of store:
y
Stores wield influence for consumptionpatterns
y Some small brands develop absolutestronghold in some type of stores
Unit Size:
y Hypermarkets store in bulk sizes, whilesmall kirana stores take on small sizes
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Oth
er factorsO
th
er factors
Consumer Demographics: imp. E.g. if yourbrand is tied to older segment, while the
rest brands cater to younger, moredisposable incomes segment
Promotion Effectiveness: In-storepromotions resulting in short temporary
spurts of sales, or shift in seasonalpurchases; retail audits also show whichpromotion works
Regionality: some brand may still work in oneregion, while going out of style elsewhere
laggards?If per capita usage falling where all else rising?
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CDI and BDICDI and BDI -- IndicesIndices
y CD!= Category Devt Index and BDI=Brand Devt Index
y Comparing brands and regions relative topopulation more important
y Comparing sales relative to competitionimp
y Ratio between National Sales and NationalPopulation; using it as an index of 100.Then comparing ratios for areas
y Can compare on base of number of retail
outlets, no of households, number of cars,number of people, etc..
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Calculating CDI and BDICalculating CDI and BDI
Annualsales(Units)
National 200,000
Area A 5,000
Area B 3,000
Area C 6,000
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Calculating CDI and BDICalculating CDI and BDI
Annualsales(Units)
Population(000s)
National 200,000 10,000
Area A 5,000 200
Area B 3,000 250
Area C 6,000 150
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Calculating
CDIand
BDICalculating
CDIand
BDI
Annualsales(Units)
Population(000s)
Sales/PopRatio
Index
National 200,000 10,000 20 100
Area A 5,000 200 25 125
Area B 3,000 250 12 60
Area C 6,000 150 40 200
So Area C is doing a lot better than Area A
not just by 10%, but by 37.5%, and over 3times as well as Area B, not just twice
Area A: Sales by Population ratio: 5000/200=25Index: If 20=100, 25=?Index ofA: 25 * 100 / 20 or (5000/200) * 100 /(200,000/10000)
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ExerciseExercise
y Compare the BDI and CDI to recommend
increase, retain, decrease or cut outAdvgSpend, Trade Promotion allowances,
Consumer promotions in each of the 5sub-areas..