Mk 4010 Final Exam Review

Mk 4010 Final Exam Review - MK 4010 Fall 2011 Dr Rigdon...

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MK 4010 Fall 2011 Dr. Rigdon Final Exam Review Problems MODULE ONE Market share 1. You sell women’s shoes in five states: FL, GA, TN, SC, NC. Last year you sold $15 MM in shoes. Total women’s shoes sales was $750 MM nationally with $125 million sold in the 5 state region. What was your market share? It only makes sense to define share in terms of those markets where you actually compete. Here, that is the women’s shoe market in the 5 state region. Market share = $15 MM / $125 MM = 12% 2. What is one disadvantage of having a large market share? There are two major disadvantages which relate just to market share and not to size of firm. A large share can make growth more difficult, because there are fewer potential customers with the same needs which have so far not been met. Growth is more likely to come from population growth (which is usually slow) or from expanding demand (which is harder than just doing what you’ve been doing). A second major disadvantage is the risk of government scrutiny. Ask AT&T and T-Mobile about that one. . Relative market share Nationally, competitor GBSC sold $250 MM in women’s shoes last year, while Other Shoe Co. sold $160 MM. In the five states where you compete, GBSC sold $25 MM while Other Shoe Co. sold $35 MM. 3. Compute relative market share for your firm. While GBSC is larger nationally, the relevant market is the one where we compete together. In the 5 state region, Other is the biggest. Our relative market share is therefore $15 MM / $35 MM = 0.429. We are not the largest player inn the market, and we are a good big smaller than the leader, but we’re not tiny. Market concentration Your firm, GBSC and Other Shoe Co are the three largest firms selling women’s shoes in the five state region. 4. Compute the three firm market concentration index. We could compute share for all three and adds those, or we can just add sales and divide by market sales once. Hence: 3 firm concentration = ($35MM + $25MM + $15MM) / ($125MM) = .60 or 60% Market penetration / brand penetration / penetration share In the five state Southeast region, you define your market as women aged 20-50 with incomes ranging from $30,000 to $250,000. There are about 15 million women in this population. Of
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that population, 14 million have purchased women’s shoes, while 1 million have purchased women’s shoes from your company. 5. Compute market penetration. What percent of people in the marketplace have bought the category? Market penetration = 14MM / 15MM = .933 = 93.3% 6. Compute brand penetration. What percent have bought our product? Brand penetration = 1MM / 15MM = .067 = 6.67% 7. If market penetration is high, what does that suggest about growth in the women’s shoe business in this marketplace? High market penetration will make future growth more difficult, but this also means that you
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This note was uploaded on 12/08/2011 for the course MK 4010 taught by Professor Edrigdon during the Fall '11 term at Georgia State.

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Mk 4010 Final Exam Review - MK 4010 Fall 2011 Dr Rigdon...

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