2010 Study Period 5

Examination Paper
School

Subject Area &

Catalogue number

MKT

MARK 2010

Paper

Market Analysis

Course Name

Student ID

Surname

Given Name/s

If you are required to use a

calculator, please note the make
and model here

Make:

Model

INTERNAL AND EXTERNAL EXAM PAPER SP 5, 2010

Official Reading Time:
Writing Time:

10 minutes
2 hours 30 minutes

INSTRUCTIONS:
Use the answer booklet provided and the attachments.
Complete the list of attempted questions on the front of the answer booklet.
Closed book exam, dictionaries and non-programmable calculators are allowed
All written material must be handed up.
The necessary formulae are included in attachment A
Plan your time
All answers are to be completed on the answer booklet. Extra answer booklets can be provided if required. Write
your details clearly on all written material used.
You are advised to show all of your working
There are 8 questions. Each question is worth a total of ten (10) marks.
The exam is out of 80.

THIS PAPER IS NOT TO BE TAKEN FROM THE EXAM ROOM

DO NOT COMMENCE WRITING UNTIL INSTRUCTED TO DO SO

MARK 2010 Market Analysis Exam, SP 5, 2010

Page 1 of 8

Question 1
Let:

Unit selling price

= $ 6.5
Unit variable cost
= $ 3.2
Sales volume
= 300,000
Advertising
= $150,000
Other relevant costs = $180,000

(a) Calculate the profit.

[2 marks]
(b) Assume that if advertising is increased by 40% sales will increase by 15%. Assume that all
other details are unchanged. Calculate the profit.
[3 marks]
(c) Assume that if advertising is reduced by 20% then sales will reduce by 30%. Calculate the
profit.
[3 marks]
(d) Under which of the three advertising budgets is the profit the greatest?
[2 marks]
Question 2
Display the data in Table 2, using the principles of data reduction, to demonstrate the
relationship between advertising and sales.
Table 2: Audience Measures for two Advertising Schedules

Brand
Brand
Brand
Brand
Brand

A
B
C
D
E

Sales
Sales
Sales
Sales
Sales

$
901,456.00
$ 1,320,748.00
$
705,398.00
$
834,567.00
$ 1,452,949.00

Advertising
Advertising
Advertising
Advertising
Advertising

$
$
$
$
$

54,087.36
76,603.38
45,145.47
51,743.15
81,365.14

[10 marks]
Question 3
For the data in table 3 calculate the:
market share;
purchase rate;
penetration;
purchase frequency;
share of category requirements;
100% loyals.

MARK 2010 Market Analysis Exam, SP 5, 2010

Page 2 of 8

Table 3 Shoppers Purchases - Raw Data

Shopper

Brand A

Brand B

Brand C

Brand D

01
02
03
Period Total

8
2
0

0
3
2

0
3
2

0
4
3

Category Total

Attachment B is provided for assistance for this question.

[10 marks]
Question 4
a) Describe the Bass model.
[Marks 2]
b) Draw the two possible shapes for a Bass curve the first being a high innovation
market and the second being a high imitation market.
[Marks 2]
Table 4: Parameters for the Bass Curve

p
q

0.33
0.12
100,000

c) The Bass Model was fitted to the year-by-year introduction of 3D TVs in Australia,
commencing in 2010. It returned a p value (coefficient of innovation) of 0.33 and a q
value (coefficient of imitation) of 0.12. The available market ( N ) was calculated as
100,000. Use the parameter values and the Bass Curve to calculate the number of
adoptions in each of first three years; i.e. t = 1, 2, and 3. Prior to period 1 there were
no adopters. Calculate also the cumulative adoptions for periods 1, 2, and 3.
[Marks 6]
Question 5
A market analyst collected the following data and used it to estimate the four parameters, a b,
c, and d of the ADBUDG function.
Table 5: Advertising and Sales

Advertising
Current
Increase 50%
Decrease 50%
Arbitrarily large
Zero

Advertising
$ Million
12
18
6
120
0

MARK 2010 Market Analysis Exam, SP 5, 2010

Sales
Million Units
25
31
13
40
5

Page 3 of 8

The analysts estimates of the four parameters were:

Table 6: ADBUDG Parameter Estimates

a
b
c
d

39.9
4.7
1.9
90.2

(a) Discuss the interpretation of the four parameters a, b, c, and d.

[2 marks]
(b) Critique the approach used by the analyst to estimate the four parameters.
[3 marks]
(c) Use ADBUDG and the analysts estimates of the four parameter in Table 6 to calculate
the sales when advertising is increased by 50% (i.e. advertising is increased to $18
million) and show that the result is approximately equal to the figure of 31 million unites
given in Table 5.
[5 marks]
Question 6
a)

Assume that for a product over the price range $ 0.80 to $0.90, the relationship between
sales and price follows the simple linear response function:
Sales = 600 345*price
Estimate the sales and price elasticity at $0.84.
[3 marks]

b)

Assume that for a product over the price range $0.80 to $0.90, the relationship between
sales and price follows the logit response function:
Sales = 2000/(1+exp(-(1.5 2.5*price)))
Estimate the sales and price elasticity at $0.86.
[4 marks]

c)

Comment on the differences between these two response functions in calculating price
elasticities.
[3 marks]

MARK 2010 Market Analysis Exam, SP 5, 2010

Page 4 of 8

Question 7
Describe at least three of the behavioural loyalty measures we discussed during the course.
[4 marks]
Brand A has market share of 40% and repeat rate of 50%. Brand B has a market share of 5%
and repeat rate of 25%. Calculate the polarization for each. Which brand has the greater
loyalty?
[3 Marks]
Calculate the market share, repeat rate and polarization for Coca Cola for the data set in Table
7.
Table 7: Two purchases from the product category are recorded for each of ten
shoppers.
Shopper
1
2
3
4
5
6
7
8
9
10

First Purchase
Pepsi
Coca Cola
Pepsi
Coca Cola
Coca Cola
Coca Cola
Coca Cola
Coca Cola
Pepsi
Coca Cola

Second Purchase
Coca Cola
Coca Cola
Pepsi
Coca Cola
Coca Cola
Coca Cola
Pepsi
Coca Cola
Pepsi
Coca Cola
[3 Marks]

MARK 2010 Market Analysis Exam, SP 5, 2010

Page 5 of 8

Question 8
Consider the following conjoint design for a chocolate bar.
There are two attributes with two to three levels for each:
Attribute:
Attribute Levels:

Price
$2.50
$2.80
$3.10

Attribute:
Attribute Levels:

Sugar content
Low
High

When price changes from $2.50 to $2.80 utility decreases by 1.5

When price changes from $2.80 to $3.10 utility decreases by 1.8
When sugar content changes from low to high utility increases by 0.3.
The coefficients for this conjoint model can be set up in several ways. Consider the following:
Set-up One
Price $2.50 Sugar content low
Price change $2.50 to $2.80
Price change $2.80 to $3.10
Sugar content change from low to high

b0
b1
b2
b3

Set-up Two
Price $2.50 Sugar content low
Price change $2.50 to $2.80
Price change $2.50 to $3.10
Sugar content change from low to high

b0
b1
b2
b3

What are the values for the coefficients for these two models?
[3 marks]
Consider a market where the following alternatives are the only available:
Price $2.50 and Sugar Content Low
Price $2.80 and Sugar Content High
Price $3.10 and Sugar Content High
Show that Set-up One and Set-up Two both generate the same estimates of the market shares
for these three alternatives.
[7 marks]
[[[

END OF EXAM

MARK 2010 Market Analysis Exam, SP 5, 2010

Page 6 of 8

Attachment A: Formulae
Linear Response Function
Y = a + bX

ADBUDG Response Function

Y b a b

Xc
d Xc

Bass Curve
nt pN q p N t

MARK 2010 Market Analysis Exam, SP 5, 2010

q
N t 2
N

Page 7 of 8

Attachment B
Students may find this table useful in calculating the brand performance measures. You may
hand this table up with your exam paper.
Name:

Student ID:

Number of Shoppers
Aggregated Raw Data
Brand A Brand B Brand C Brand D Category Total
Shopper 01
Shopper 02
Shopper 03
Period Total
Average Purchase Rate
Market Share
Number of Buyers
Penetrations
Purchases Frequency
Share of Category Requirements (SCR)
Category purchases by buyers of brand
Aggregate SCR
100% Loyals, also known as Sole Buyers
Shopper 01
Shopper 02
Shopper 03
100% Loyals

MARK 2010 Market Analysis Exam, SP 5, 2010

Page 8 of 8