You are hired as a consultant for PepsiCo to analyze the competitive situation for one of their most important brands

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Question 1:  Analyzing the Competitive Structure (12 PTs)

You are hired as a consultant for PepsiCo to analyze the competitive situation for one of their most important brands, Tropicana Orange Juice. The company is increasingly worried about the competitive position of their brand especially against Minute Maid (MM) which is owned by their arch rival, The Coca Cola Company. Furthermore, arrival of other brands and growing share of Private Labels have put strong pressure on increasing sales of Tropicana. Your objective is to analyze the competitive situation of Tropicana in this product category. 

 

One of the key metrics to analyze the competitive structure is to examine the price elasticity matrix and compute measures of “clout” and “vulnerability”. To guide your analysis, PepsiCo has provided you with sales data from one of their largest retail accounts. The file OJ_Competition.csv provides you with weekly sales for Tropicana and 3 of its key competitors: Minute Maid, Florida, and Private Labels. The dataset consists of sales data from a total of 116 weeks. 

 

Run 4 log-log regressions to compute each brand’s own-price elasticity and cross-price elasticity. Share the relevant JMP output as well. 

 

Answer the following questions: 

 

a. Using the results from the log-log regression model, complete the following “Price Elasticity Matrix” 

Tropicana Minute Maid Florida Private Label

Model 1 Tropicana

Model 2 Minute Maid

Model 3 Florida

Model 4 Private Label

b. Calculate clout and vulnerability of each brand. Which is the most “vulnerable” brand in this category? Which brand has the highest “clout”? 

 

c. What happens to Tropicana sales when Minute Maid cuts its price by 10%? What happens to Minute Maid when we (Tropicana) cut price by 20%? 

If MM cuts its price by 10%, Tropicana's sales may decrease because Tropicana’s customers may switch to Minute Maid. 

If MM cuts its price by 20%, 

 

 

d. Who is the closest competitor to Tropicana? Provide a brand map below and answer this question.

 

e. Given the prices for all brands in the next period as below, forecast the sales for Tropicana. What are the Tropicana sales when the OJ prices are as follows? Use the appropriate log-log regression model out of the four different models you conducted. 

 

Tropicana $3.99

Florida $3.59

Minute Maid $3.49

Private Label $2.99

 

 

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