mgcr 352 quanti

# mgcr 352 quanti - Market Share Calculating Market Share...

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Mgcr352 quantitative analysis - 1 of 30 MGCR352 MARKETING MANAGEMENT 1 QUANTITATIVE ANALYSIS NOTES Market Share Calculating Market Share Estimating the Size of a Market (Step Down Analysis) Types of Costs and Margins Fixed and Variable Costs Contribution and Profit Margins Breakeven Analysis In units and dollars Using breakeven analysis strategically Price Elasticity For a single product Cross price elasticity between two products. Price Chains Market Share Market share is the percent of the total market (expressed in units or dollars) that your brand or product controls. Your brand \$ sales Your brand unit sales MS(\$) = -------------------------- MS (Units) = ------------------------------ Total segment \$ sales Total segment unit sales Not all brands in a segment are sold at the same price, therefore the answer to these two market share calculations may differ. Estimating Market Size - The Step Down Approach Suppose we want to know our market share of the price sensitive segment of liquid laundry detergent in Montreal . Suppose we know that our brand has \$365,000 in sales and that the total Canadian market of all laundry detergent is \$217,500,000. What information do we need to know to calculate our particular market share of just the liquid detergent segment just in Montreal?

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Mgcr352 quantitative analysis - 2 of 30 Estimating Market Size - The Step Down Approach continued… 1. Size of the Quebec laundry detergent market in comparison to all of Canada: 21% 2. Size of the Montreal laundry detergent market in comparison to all of Quebec: 48% 3. Size of the Price Sensitive segment of consumers in Montreal: 20% 4. Size of the Liquid (as opposed to Powder) Detergent sales in Montreal: 45% Total Detergent Sales in Quebec: .21 x \$217,500,000 = \$45,675,000 Total Detergent Sales in Montreal: .48 x \$45,675,000 = \$21,924,000 Total Price Sensitive Detergent Segment Sales in Montreal: .20 x \$21,924,000 = \$4,384,800 Total Liquid Detergent Sales in Price Sensitive Segment in Montreal: .45 x \$4,384,800 = \$1,973,160 \$365,000 Our Market Share = ----------- = 18.5% \$1,973,160 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, research and development…) 2) Variable Costs (VC) are directly associated with volume of production (I.e. labour, materials, transportation, promotion costs such as allowances, coupons, …) 3) Contribution Margin (CM) represents how much is left over after accounting for the variable costs to cover fixed expenses. Contribution Margin % tells you what % of each \$ you earn goes towards covering fixed expenses. CM per unit = Price per unit - VC per unit
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## This note was uploaded on 11/23/2011 for the course MGCR 2049 taught by Professor Edwardbierbrier during the Fall '10 term at McGill.

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mgcr 352 quanti - Market Share Calculating Market Share...

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