Quantitative Analysis Tutorial

# Quantitative Analysis Tutorial - Quantitative Analysis...

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Quantitative Analysis MGCR-352

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Quantitative Analysis Tutorial Market Share Types of Costs and Margins Breakeven Analysis Price Elasticity Price Chains
Market Share Market Share is the % of the total market that a brand or product controls: Market Share (\$) = Brand A \$ sales Total segment \$ sales Market Share (units) = Brand A unit sales Total segment unit sales

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Example 1 Total coffee sales for 1996 = \$800.5 million Maxwell House’s 1996 coffee sales = \$105 million (a) What is Maxwell’s share of the market?
Example 1 Total coffee sales for 1996 = \$800.5 million Maxwell House’s 1996 coffee sales = \$105 million (a) What is Maxwell’s share of the market? MS (\$) = \$105,000,000/\$800,500,000 = 13.12% Note: Let’s say the average retail price of a 34oz can of Maxwell House coffee = 26.25\$ In 1996, Maxwell House sold 4 million cans of coffee MS (\$) = \$4,000,000*26.25 /\$800,500,000 = 13.12%

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Estimating Market Size: The Step Down Approach Total coffee sales for 1996 = \$800.5 million Maxwell House’s 1996 coffee sales = \$105 million Suppose there are two unique segments in the coffee market: percolated coffee drinkers and instant coffee drinkers. Percolated coffee drinkers make up 86.5% of the coffee market and instant coffee drinkers 13.5%. (b) Assuming Maxwell House targets percolated coffee drinkers, calculate the target market share.
Example 1 Total coffee sales for 1996 = \$800.5 million Maxwell House’s 1996 coffee sales = \$105 million Suppose there are two unique segments in the coffee market: percolated coffee drinkers and instant coffee drinkers. Percolated coffee drinkers make up 86.5% of the coffee market and instant coffee drinkers 13.5%. (b) Assuming Maxwell House targets percolated coffee drinkers, calculate the target market share. Total Percolated coffee drinkers segment sales = 0.865 *800.5M = \$692,432,500 Maxwell’s MS of percolated coffee drinkers segment = \$105,000,000/ \$692,432,500 = 15.16%

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Types of Costs and Margins 1) Fixed Costs (FC) do not fluctuate with changes in volume of production (i.e. advertising, public relations, fixed salaries, administration and overhead, rent, utilities, research and development…) 2) Variable Costs (VC) are directly associated with volume of production (i.e. labor, materials, transportation, promotion costs such as
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## This note was uploaded on 01/31/2011 for the course MGCR MGCR 331 taught by Professor Kerklan during the Fall '10 term at McGill.

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Quantitative Analysis Tutorial - Quantitative Analysis...

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