Market Type and Price elasticity
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Transcript of Market Type and Price elasticity
EconomicsProf. Doaa M. Salman
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Ahmed hazaaLamees sabry kamal
Mohamed Abd Basset
• Introduction :-
• EGC – Iceman, it was establish as EGC Egyptian Denmark Company one of the market leaders in the Ice-cream industry after the conflict of the Muslim world and the Denmark for the draws of the prophet Mohamed it was changed to be EGC Egyptian Co for industry.
• In 2011 the company expands their facilities including more 4 factories for Chips, Snacks, Chocolate and Biscuits with a growth in the snacks and biscuits category the company were able to gain a market share and being one of the biggest manufacturing in those categories.
• Objectives:-
• Provide a premium quality with the least possible cost .
• Serve and satisfy our customer needs .• Provide a career growth for our employees and
learning new skills.• Reach a wide range of distributions in urban and rural
area with effective and efficient process.• Identify the brand building area and maximize the
brand existing .
• Market Volume:-• The Market volumes of consumption for both Trade&
Consumers are high in an average of 8 packages weekly .
• Market Share:-• The Company focuses their POS (Point of sales) on the
delta and Upper Egypt area gaining an average of 30% a market share on the covering areas with more than 12 branches in other cities than Egypt reliance on decentralization policy in operation .
• Market Type:-• The Biscuit Market is a very competitive market with
more than 20 Producers and importing companies in the market offering different type of biscuit to different kind of segments in the market.
A Short list for the Competitive in the market :
• Basco Masr ( A Market Leader )• Ulker • Ayman Shain • Americana • Over Seas ( EL Shamadan )
• Company Portfolio:- • EGC – Iceman had 5 different Brands in the market.
EGC
Lanza
Cracky
V.cutPerfetto
Iceman
Our Product:-Lanza is a biscuit Brand with more than 11 sub brand and SKU ( Stock keeping unit ) targeting consumer with in the B and C class with an average age of 8 to 25 years in rural area in delta and upper Egypt gaining a 30% market share in the delta. Factor effecting supply:-• Consumer preference • Distribution power • Marketing and sales ability • Technology • Production ability
Factors affecting demand:-• Pricing • Taste • Availability • Quality
Supply for the product (Production plan ):-• What we have been able to produce in 2014 and 2015 for 3
different sub brands
SKU Production
Quantity
Year Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Arco
2014 5,365
3,500
6,437
6,450
8,297
8,439
7,217
9,057
11,064
6,566
5,330
3,819
2015 1,271
7,735
9,799
5,004
4,518
11,102
6,877
10,122
16,430
12,803
7,174
10,042
1- Arco Biscuit
4,877 4,000 5,852 5,864 7,543 7,672 6,561 8,234 10,058 5,969 4,845 3,4721
2
3
4
5
6
7
8
9
10
11
12
Series 1
Series 1
Annual quantity sold for both wholesaler and retailer
Consumer Price 12 LE
SKU Quantity Sold
Year Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Annual Quantity
Arco
2014 4,877
4,000
5,852
5,864
7,543
7,672
6,561
8,234
10,058
5,969
4,845
3,472 74,947
2015 1,155
7,032
8,908
4,549
4,107
10,093
6,252
9,202
14,936
11,639
6,522
9,129 93,524
Growth Rate
-3,722
3,032
3,056
-1,315
-3,436
2,421
-309
968
4,878
5,670
1,677
5,657
18,577
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec -
5,000
10,000
15,000
20,000
25,000
30,000
4,877 4,000
5,852 5,864 7,543 7,672
6,561 8,234
10,058
5,969 4,845
3,472
1,155
7,032
8,908
4,549 4,107
10,093
6,252
9,202
14,936
11,639
6,522
9,129
2015
2014
2. Marotte
SKU Production Quantity Year Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Marotte 2014
15,732
29,277 25,523
26,501 20,787
10,624 19,496
22,294 22,806 17,987
11,629
2015
14,231
19,427 23,783
19,980 15,616
10,126 11,050
12,343
6,947 12,573
8,026
SKU Quantity
SoldYear Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Annual
Quantity
Marotte
2014 19,463 14,302 26,615 23,203 24,092
18,897
9,658
17,724
20,267
20,733
16,352
10,572 221,878
2015 7,766 12,937 17,661 21,621 18,164
14,196
9,205
10,045
11,221
6,315
11,430
7,296 147,857
Growth Rate -11,697 -1,365 -8,954 -1,582 -
5,928 -4,701
-453
-7,679
-9,046
-14,418
-4,922 -3,276 -74,021
2. Marotte
14,231 19,427 23,783 19,980 15,616 10,126 11,050 12,343 6,947 12,573 8,026123456789
1011121314151617181920
20142015
Annual quantity sold in 2014 and 2015 for both wholesaler and retailer Consumer Price 12 LE in 2014 18 LE in 2015
Due to the change in the price of the product from 12 to 18 le it decline the quantity sold in 2015 by 74021 pack
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec -
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
45,000
50,000
19,463
14,302
26,615 23,203 24,092
18,897
9,658
17,724 20,267 20,733
16,352
10,572
7,766 12,937
17,661 21,621 18,164
14,196
9,205
10,045 11,221
6,315 11,430
7,296
20152014
Arco Biscuit Demand Elasticity:
= (93524-74947)/93524+74947) / (( 12-12)/(12+12)/2)) Inelastic relation Arco Biscuit Supply Elasticity:E/S= ((Q2-Q1/(Q2+Q1)/2)) / (P2-P10/(P2+P1)/2)= ((104892-83555)/(104892+83555)/2)) / (( 12-12)/(12+12)/2))Inelastic relation
2 1 2 1
2 1 2 1
( ) /[( ) / 2]Price elasticity of demand =( ) /[( ) / 2]Q Q Q QP P P P
Marotte Biscuit Demand Elasticity:
E/D= ((Q2-Q1/(Q2+Q1)/2)) / (P2-P10/(P2+P1)/2)= ((147857-221878)/(147857+221878)/2) / (( 18-12)/(18+12)/2)0.4/0.4=1 Unitary Elastic
Marotte Biscuit Supply Elasticity:E/S= ((Q2-Q1/(Q2+Q1)/2)) / (P2-P10/(P2+P1)/2)((156117-224670)/(156117+224670)/2)) / (( 18-12)/(18+12)/2)0.4-0.36= 1.1 Elastic Demand
2 1 2 1
2 1 2 1
( ) /[( ) / 2]Price elasticity of demand =( ) /[( ) / 2]Q Q Q QP P P P
Conclusions– The lake of financial resources. – The centralization in the management process .– The lake of the demand planning ( supply chain).– The instability in some of the product quality.– Not following a sales mix between wholesalers
and retailers .– Has no brand image know in the urban areas. – Distribution areas are not really defined.– Focus on selling more than marketing.