Introduction
In this research paper, we intend to prove whether or not it is viable for this supermarket chain to extend the product line of the toothpaste brand Freshgel. To do this we will need to examine the data provided and formulate a number of descriptive statistics utilising SPSS analysis. Following intense evaluation of the information we will compile a detailed report summarising our interpretation of the data, whilst also explaining the approach we have used. Finally, we will come to a succinct conclusion informing the regional manager if expanding their current product line would be beneficial for the company. The goal of our report is to accurately and correctly analyse Freshgel’s pricing strategy, both individually and compared …show more content…
The Sig. (2-tailed) for Prodent is zero, implying that the strong correlation (-0.856) is significant. The two national brands, Colgate and Prodent, both experience a noticeable decline in sales when they attempted to increase prices over the 26 week period. Therefore, this is a strong indication that what we intended to achieve in the observation of our data can be proven, especially with the support of additional statistics. With regards to the private label, Freshgel, all that can be deduced from their pricing strategy is that the prices they set were not at a low enough level to entice consumers who would otherwise choose the two dominant brands in the industry. Their unit sales are considerably lower than that of their competitors and in order to achieve success their most likely strategy is to reduce prices even further. However, even if they witness an increase in unit sales, it is likely that their revenue will not increase substantially.
In contrast, Store Two’s results are indicative of a slightly different relationship, as the correlation of the price and amount for sales is positive for Colgate. It is negative, but very close to zero in Prodent’s case. The sales for Colgate remarkably increase with an increase in prices, albeit marginally, whilst the opposite is true …show more content…
The price elasticity of Colgate’s product is inelastic (-0.894) for Store One’s sales, which reflects the data represented in Figure 1.1. Inelastic demand implies that the quantity demanded changes slightly with a large movement in price. However, as their respective elasticity values are extremely close to 1, even a moderate price movement will have a noticeable effect on demand. As seen in the sales of Store One in Figure 1.1 the range between the maximum and minimum values is substantial. Conversely, the price elasticity of Prodent’s good in Store One is elastic (-1.377), indicating that demand is more responsive to a price change than Colgate’s product thus proving that Colgate is the most dominant firm in Store One. However, the two brands prove to be much more competitive in Store Two, reflected by their similar price elasticity levels (-0.84 and -0.93).
Perhaps a logical explanation for this difference is due to the contrasting consumer behaviour for Store One and Two. Store One customers may be more enticed by discounts from brands with a large stature whereas Store Two consumers may appreciate the dependability of a consistently low, high quality