Type: Economics
Pages: 7 | Words: 1867
Reading Time: 8 Minutes

Taking the variables into consideration, the data depicts a positive relationship between penetration and purchase duplication in the brands. Positive correlation is shown as a relationship between parameters where if one variable increases, the other also increases and if there is a decrease in one variable then subsequently also the other variable experiences a decrease. In the model chart, purchase duplication is represented by Y which in the equation equal to 1.98; while X represents the penetration as equally demonstrated by the square of r being 72.9%. By analyzing the entries provided we realize that duplication decreases from the records on BB standards with a highest of 78 to Aztec brand with a record lowest 6 in the average duplication. We can deduce that this decrease might be an outcome of consumer preferences for acquisition of items with bigger brand names.

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Analysis of results obtained from scatter plot indicates that the average duplication is represented by the Y-axis (equals to 72.9%) while the X-axis represents penetration. The implications of these values and the corresponding relationship means, every increase in penetration will yield twice the increase in duplication. A simple example to illustrate this phenomenon is if BB standards increase their market share by about 5%, other companies will respond by duplication of about 10% as they too try to expand their share of the market. This can be summarized by Duplication = 2 x penetration.

Looking at the entries provided, it shows in the duplication row that BB brands recorded the highest at 78% while BB Murphy and ETA O’Ryans have proportions of 43% each. Then it is followed by Kettle fries with 37% while BB Twisty has 30% in proportions to the average duplication. ETA Munchos as well as BB Biguns both get average duplication proportions of 28% each after which Burger Rings and CC’s score proportions of 27%. The least scoring are Sanchos with a recorded 18% whereas Aztec has a duplication average proportion of 6%. Outlined below is a tabulated calculation of the average duplication and average penetration for all the brands.

In order to get the duplication coefficient, we can calculate by dividing average duplication of the brands (in this case being 33) by the average penetration (in this case being 14.33). After working out we get a coefficient of 2.32. What this means is that coefficient duplication shows the levels of combinations between two products that will likely realize higher purchases by consumers. At the same time the coefficient helps in determining the most suitable arrangement for higher output. This way the company can make vital decisions regarding preferred lines of production. However, in our scenario the duplication coefficient is considered low and this can be occasioned by the consumer trends where customers do not have much differentiation between brands in the market.

Duplication coefficient as a parameter can be used to project anticipated duplication for the brands in the market. Taking our figure of duplication coefficient at 2.3 we can multiply the penetration of each brand by the coefficient.  When making a comparison between the duplication entries provided initially vis-à-vis the actual figures of products and brands, we can infer that the consumers of BB Murphy are the ones expected to gain mostly by the duplication coefficient as a result of higher proportions for anticipation of duplication (standing at 47%) whereas customers for Aztec brand will have the least benefits since their duplication proportion stands at 6% to the duplication coefficient.

There are many reasons for differed duplications in brand purchases as the market that serves a variety of brands can be influenced by factors like brand imaging, brand loyalty or even consumer preferences and tastes. If a market exhibits no functional differences in brands, it is expected that duplication will occur in the purchases of every brand in the market. This is based on the assumption that the consumers pay little or no loyalty to particular brands or products. In such scenarios, where there is no brand loyalty it is expected that penetration will be fairly easier than where the markets shows considerable differentiation between products and where brand or product loyalty is high. All the same, taking the data provided for salty snacks, the law of double jeopardy applies as the purchases differ significantly between brands.

Aztec brand which has a lower duplication of 6% is considered to be having low number of buyers and brand loyalty as well as compared to brands like BB standards. Additionally, looking at the purchases of potatoes for the three groups we find out that the average duplication is 42, 57 and 51 respectively. It shows on average that given a chance to purchase salty snacks, 50% of consumers will buy potato products while 30% will go for extruded products and only 22% will opt for salty corn products. By inference, customers who purchase extruded products have also likelihood to purchase potato products as well. However, their high average duplication (standing at 57) indicates also their loyalty to extruded products. Consumers preferring salty corn products are ranked second as the duplication stands at 51 which is relatively higher than that for consumers of potato products (standing at 42). What this means is that even though many customers prefer extruded products, they may as well purchase other products too. Again considering the data provided and the brands in comparison to their chances of switching or brand deviation, as expected from customers with little loyalty to any brand or product, we notice that BB Standards has the highest in deviation (standing at 34) when comparing the expected and duplication average. Technically it means that customers preferring BB standards are more likely to deviate or even switch brands. The Sanchos brand on the other hand, has the highest negative deviation (at -9), denoting that Sanchos customers are quite unlikely to switch to other brands. This couls also mean some considerable degree of loyalty to the company. Finally, the general behaviors of customers in the data provided shows they 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.

By calculating the average proportion for each brand or product as provided indicates that about 1.8 of potato snacks customers will also purchase extruded products and a proportion of 1.6 of customers initially preferring potato products will also purchase corn products. In a nut shell this means that consumers of potato products have a high propensity to buy extruded product than corn product. However, consumers for extruded products who can also buy potato products are estimated in a proportion of 2.2 and the number of consumers for extruded products purchasing corn products is estimated in a proportion of 3.7. This analysis brings us to a conclusion that consumers of extruded products have a high likelihood to buy corn products rather than potato products. Therefore customers buying potato products are the least loyal to the brand or the product while corn product customers are considered the most loyal.

Considering the data provided initially in the spread sheet, we can deduce that the duplication coefficient demonstrates the average penetration of each product type (potato, extruded and corn). This as well shows customers tendency to switch product brands. The figure of 3.7 interprets not only the average penetration of corn product but also the average of tendency for consumers of extruded products to purchase corn products. The loyalty level of extruded products customers is very little or low since there is a higher likelihood for these customers to also purchase corn products. At the same time, the chances of extruded products customers’ also purchasing potato products are 2.2, which demonstrate the probability of consumers of extruded products buying corn products are high in comparison to potato products.

The above scenario demonstrates the advantages and disadvantages of each product type. Likewise, it gives indication on the levels of customer loyalty toward the brands and products. The conclusive discussions advanced below are based on certain facts gathered from the data provided.

Being a manager of Burger Rings launching a new product and deciding the best product type whether its potato products, extruded products or corn products, will have to keep in mind the margins and profitability which seem to be the same in each sub-market. The preferred choice for the new product would be a potato type product which we shall call Cruchos. The main factors that were taken under consideration in arriving at this decision include the following: First and foremost is the fact that potato products have the largest customer base. 50% of all customers purchasing salty snacks would purchase a potato product type snack which is also demonstrated in the penetration percentage. The second factors is the fact that customer’s loyalty in the market has been observed to be low towards the brand, thus showing that consumers of potato products (who are considered the least loyal to a brand) have greater probability to purchase extruded products while the consumers of corn products are being considered the highest. Thirdly, Burger Rings Company has a negative deviation or brand switching likelihood in comparison to potato products companies which have high or non negative deviation. This in essence means potato products companies suffers from either low to zero brand loyalty. Therefore, there is a higher probability for consumers of potato products to switch brands from existing competitors’ products to the new product that Burger Rings will launch.  Last but not the least, is the fact that in this market Duplication = twice the average Penetration.  Meaning that if the strong companies increase their market share by 1% chances are the duplications of weaker companies will equal 2%. Hence, even if Burger Rings is considered a small player in the market, when the strong competitor increase its market share Burger Rings will have the chance to duplicate hence the prevailing market condition offer an advantage favoring Burger Rings .

These factors seem conducive for Burger Ring to enter, however the company should undertake critical steps in order to ensure its success. A few of the steps that can be recommended include using marketing tools in order to differentiate the company from its competitors to decrease deviation and probability for brand switching. This is important as the market has demonstrated that customers of potato products have low loyalty to the brand. A good example is BB standards as they have a high rate of penetration but a positive deviation. Step two would involve increasing product quality which is expected to translate into increasing the demand. In as much as the potato product line is well thought-out to be suitable to enter with the new product, it is obvious also the market has strong brands already like the BB standards which are considered the leader in market share and other companies are well positioned the market. Burger Rings should use the positive deviation level to increase their customer’s base by offering top quality products that can attract considerable demand. This way, establishing a new brand name in a market that largely doest not exhibit brand loyalties can effectively increase the market share of the new player.

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