7 Product Analysis

8/8/2019 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..

Documents

7 Product Analysis