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Nielsen Data Analysis: Heavy Liquid Detergent Category and Arm & Hammer Brand

1. Please indicate how the following measures are related to each other? Provide an example of a calculation using the data provided to verify the relationship. a) Total US FDM Sales and Total US Food Sales Total US FDM Sales is the total value, across all regions and brands, of category sales (Heavy Liquid Detergent) in all food, drug and mass channels. Total US Food Sales is the total value, across all regions and brands, of category sales (Heavy Liquid Detergent) in only food channels (i.e. grocery stores). We can also measure the relationship between Total US FDM Sales and Total Food Sales by looking at the ratio FDM Sales / Food Sales over the time period from Oct 2007 to Oct 2010. The data shows that even though the two sales figures fluctuate, on average FDM is about 1.45 times Food Sales. In other words, we could infer that sales generated from Food stores are about 2/3 of sales from all three channels: Foods, Drugs and Mass retailers.

FDM/Food sales
1.550 1.530 1.510 1.490 FDM/Food 1.470 1.450 1.430 1.410 1.390 1.370 1.350 10/27/07 12/15/07 02/02/08 03/22/08 05/10/08 06/28/08 08/16/08 10/04/08 11/22/08 01/10/09 02/28/09 04/18/09 06/06/09 07/25/09 09/12/09 10/31/09 12/19/09 02/06/10 03/27/10 05/15/10 07/03/10 08/21/10 10/09/10

b) Total US Food Sales and Market Sales As stated above, Total US Food Sales is the total value, across all regions and brands (i.e. nationally), of category sales (in this case, Heavy Liquid Detergent) in only food channels (i.e. grocery stores). Market Sales is the total sales of all brands for each particular geographic market. When we add up the total sales of all regions, we should arrive at a number that is close to the Total US Food Sales. In fact, for the week ending on Oct 27, 2007, the sum of all regional sales is \$37,235,251 while Total US Food Sales is \$37,396,050 a difference of approximately 0.43%. Similarly, over the period 2007 2010, the difference is only 0.25% on average.

The very minor differences are most likely due to rounding and collection errors during the data gathering or entering process. TTL Food Sales vs. Market Sales Comparison Market Sales TTL FOOD Sales % Difference

Week

0.43% 0.37% 0.38% 0.50% 0.40% 0.25%

TTL Food Sales vs. Market Sales Comparison for Week of October 27, 2007 Market Sales EAST NORTH CENTRAL DIVISION \$2 MM EAST SOUTH CENTRAL DIVISION \$2 MM MIDDLE ATLANTIC DIVISION \$2 MM MOUNTAIN DIVISION \$2 MM NEW ENGLAND DIVISION \$2 MM PACIFIC DIVISION \$2 MM SOUTH ATLANTIC DIVISION \$2 MM WEST NORTH CENTRAL DIVISION \$2 MM WEST SOUTH CENTRAL DIVISION \$2 MM Sum of Total \$6,054,743 \$1,596,336 \$6,998,271 \$2,003,877 \$2,320,689 \$4,599,540 \$8,297,201 TTL US Food Sales \$37,396,050 \$37,396,050 \$37,396,050 \$37,396,050 \$37,396,050 \$37,396,050 \$37,396,050

\$2,069,283

\$37,396,050

\$3,440,987

\$37,396,050 \$37,396,050

\$37,380,927

c) Any Promotion Sales Dollars and Sales Dollars Arm & Hammer sales figures from week of 10/27/07
Sales Dollars \$483,128 \$76,894 \$390,929 \$106,370 \$269,575 \$178,676 \$398,953 \$73,860 \$124,871 \$2,103,256 No Promo Sales Dollars \$152,783 \$43,983 \$261,205 \$70,144 \$124,485 \$102,647 \$246,239 \$34,911 \$74,309 \$1,110,706 Any Promo Sales Dollars \$330,345 \$32,911 \$129,724 \$36,225 \$145,091 \$76,029 \$152,714 \$38,949 \$50,563 \$992,550 No Promo + Any Promo = Sales Dollars \$483,128 \$76,894 \$390,929 \$106,370 \$269,575 \$178,676 \$398,953 \$73,860 \$124,871 \$2,103,256

MKT ID EAST NORTH CENTRAL DIVISION \$2 MM EAST SOUTH CENTRAL DIVISION \$2 MM MIDDLE ATLANTIC DIVISION \$2 MM MOUNTAIN DIVISION \$2 MM NEW ENGLAND DIVISION \$2 MM PACIFIC DIVISION \$2 MM SOUTH ATLANTIC DIVISION \$2 MM WEST NORTH CENTRAL DIVISION \$2 MM WEST SOUTH CENTRAL DIVISION \$2 MM Total

Any Promotion Sales Dollars is roughly half of Sales Dollars because Sales Dollars is comprised of Any Promo plus No Promo. We created an additional column of data that combines No Promo and Any Promo columns in order to prove that those two variables equal Sales Dollars. Additionally, the chart below illustrates the relationship between these variables for the entire dataset. The chart also illustrates that Any Promo Sales is the driver of the fluctuations in overall Sales Dollars.

Relationship between Promo, No Promo & Total Sales

Millions 6 5 4 Sum of Sales Dollars 3 2 1 0 10/27/07 12/22/07 02/16/08 04/12/08 06/07/08 08/02/08 09/27/08 11/22/08 01/17/09 03/14/09 05/09/09 07/04/09 08/29/09 10/24/09 12/19/09 02/13/10 04/10/10 06/05/10 07/31/10 09/25/10 Sum of Any Promo - Sales Dollars Sum of No Promo - Sales Dollars

d) Market Units and Market Equivalent Units Market units are the total number of items per brand per region of all sizes (i.e. 16 oz, 32 oz, 128 oz). Market Equivalent Units normalizes the total units sold to a category equivalent unit in order to make it easier to compare the units sold so that a 128 oz. bottle of detergent is weighed twice as heavily as a 64 oz. bottle. The data suggests that consumers are trending towards purchasing smaller units. At the beginning of the data series, consumers are purchasing unit sizes that are an average of 6 to 7 times larger than the category equivalent unit size. As time progresses, consumers begin purchasing smaller unit sizes (approximately 4 to 5 times larger than the category equivalent size). This could be due to the deteriorating condition of the economy, as consumers are purchasing smaller units of detergent at lower prices in order to keep their basket price down.

Ratio of Mkt Equivalent Units to Mkt Units

8.0 Ratio: Mkt Equiv Units / Mkt Units 7.0 6.0 5.0 4.0 3.0 2.0 1.0 0.0 10/27/07 12/01/07 01/05/08 02/09/08 03/15/08 04/19/08 05/24/08 06/28/08 08/02/08 09/06/08 10/11/08 11/15/08 12/20/08 01/24/09 02/28/09 04/04/09 05/09/09 06/13/09 07/18/09 08/22/09 09/26/09 10/31/09 12/05/09 01/09/10 02/13/10 03/20/10 04/24/10 05/29/10 07/03/10 08/07/10 09/11/10 10/16/10

e) Any Promotion Sales Units and TPR Only Unit Volume TPR (Temporary Price Reduction) does not include sales units sold as feature only, display only, feature and display, feature and price reduction, or display and price reduction. Therefore, it is smaller than the Any Promo Sales Units, which includes all units sold with some combination of feature, display, and temporary price reduction. The chart below suggests that Any Promo unit volume fluctuates much more significantly than TPR Only Sales Units. We can also see that TPR promotions account for about 1/3 of All Promo Unit volume.

Any Promo Units vs. TPR Only Units

Sum of TPR Only Unit Vol Millions 4.0 3.5 3.0 2.5 2.0 1.5 1.0 0.5 0.0 10/27/07 12/01/07 01/05/08 02/09/08 03/15/08 04/19/08 05/24/08 06/28/08 08/02/08 09/06/08 10/11/08 11/15/08 12/20/08 01/24/09 02/28/09 04/04/09 05/09/09 06/13/09 07/18/09 08/22/09 09/26/09 10/31/09 12/05/09 01/09/10 02/13/10 03/20/10 04/24/10 05/29/10 07/03/10 08/07/10 09/11/10 10/16/10 Sum of Any Promo - Sales Units

2. For the duration of the data, plot the national sales trends for your product category in the Food channel. Next plot your target brands sales trends. Very briefly, describe what you observe. Arm & Hammer (A&H) saw a trend of increasing sales from October 2007 to October 2010. Initially A&H sales were well below the average total detergent sales in the food (grocery) channel, however, brands sales trended upwards as category sales remained basically flat during this time period.

\$50 Dollars of Detergent Category Sales

\$5

\$40

\$4

\$30

\$3

\$20

\$2

\$10

\$1

\$10/27/07 12/08/07 01/19/08 03/01/08 04/12/08 05/24/08 07/05/08 08/16/08 09/27/08 11/08/08 12/20/08 01/31/09 03/14/09 04/25/09 06/06/09 07/18/09 08/29/09 10/10/09 11/21/09 01/02/10 02/13/10 03/27/10 05/08/10 06/19/10 07/31/10 09/11/10 10/23/10

\$-

3. For the duration of the data, how do your brand sales compare to the baseline sales? A&Hs baseline sales were steady and on a slight upward trend from October 2007-2010, implying the underlying franchise strength is stable. At the same time A&Hs total sales fluctuated significantly, implying that promotions are driving short-term sales. Moving forward, A&H may want to rework its promotional mix and seek greater in-store support for its promotional efforts to smooth out the incremental sales volatility.

A&H Brand Sales vs. Baseline Sales

Sum of Sales Dollars Millions \$5.0 \$4.5 \$4.0 \$3.5 Sales Dollars \$3.0 \$2.5 \$2.0 \$1.5 \$1.0 \$0.5 \$0.0 10/27/07 12/08/07 01/19/08 03/01/08 04/12/08 05/24/08 07/05/08 08/16/08 09/27/08 11/08/08 12/20/08 01/31/09 03/14/09 04/25/09 06/06/09 07/18/09 08/29/09 10/10/09 11/21/09 01/02/10 02/13/10 03/27/10 05/08/10 06/19/10 07/31/10 09/11/10 10/23/10 Sum of Baseline Sales Dollars

4. Select a region of your choice. For the duration of the data, what do you learn about your brands price, feature, display and temporary price reduction activities? Price can be inferred by dividing sales revenue by units sold. Is your brand heavily promoted? What volume of sales is from promotions? What is the average promoted and nonpromoted price? For our purposes, we chose the New England Division and learned a great deal about A&Hs pricing and promotions during the provided time period. Regarding pricing, we observed that the average weekly price per unit increased from \$3.63 in October of 2007 to \$4.94 in October of 2010. Over this three year period, the average weekly price per unit was \$4.28, the average promoted price was \$3.29 and the average non-promoted price was \$5.41.

Average price
7.00 6.00 5.00 4.00 3.00 2.00 1.00 0.00 10/27/07 12/08/07 01/19/08 03/01/08 04/12/08 05/24/08 07/05/08 08/16/08 09/27/08 11/08/08 12/20/08 01/31/09 03/14/09 04/25/09 06/06/09 07/18/09 08/29/09 10/10/09 11/21/09 01/02/10 02/13/10 03/27/10 05/08/10 06/19/10 07/31/10 09/11/10 10/23/10

We also learned that A&H detergent was heavily promoted during this time period, with 62% of unit sales occurring during one of the various promotion types. Further analysis revealed the following:

14% of unit sales occurred during a feature without display 6% of unit sales coincided with a display without feature 21% of unit sales occurred while both a feature and display were used 20% of unit sales were the result of a temporary price reduction only

5. For the selected region in (4) above, repeat the analyses for a competitor. Please point to key differences you observe between you and the competitor. For the sake of comparison, we also looked at similar pricing and promotions information for Gain in the same New England Division. We observed that Gains average weekly price per unit increased from \$6.34 in October of 2007 to \$10.25 in October of 2010. The average weekly price per unit over the same period was \$7.68, the average promoted price was \$6.59 and the average non-promoted price was \$8.12. Only 35% of Gains unit sales occurred during a promotion. The breakdown was as follows:

11% of unit sales occurred during a feature without display 4% of unit sales coincided with a display without feature 2% of unit sales occurred while both a feature and display were used 17% of unit sales were the result of a temporary price reduction only

From analyzing A&H and Gain side-by-side, it is clear that A&H relies more heavily on promotions to stimulate sales. Additionally, the average price for Gain increased by a much higher percentage than the average price for A&H (62% versus 36% respectively), over the provided three-year period. A&H Sales Breakdown Gain Sales Breakdown

6. Which regions are the biggest sales volume contributors for your brand? Prepare a table or graph to summarize your results and report any relevant insights. A&H sales volume across all 9 regions has been distributed in a pretty consistent pattern since 2007. As the below bar chart shows, Middle and South Atlantic divisions have always been the two biggest volume contributors to sales volume of Arm and Hammer, followed by East North Central division. Throughout the period Oct 2007 to Oct 2010, South and Middle Atlantic account for 20.59% and 27.35% of the companys total unit sales respectively. A&Hs sales volume in Middle Atlantic fluctuated a lot but the company has almost always obtained the largest share of their sales there, except in Q4 2009 and Q4 2010. Meanwhile, sales volume in South Atlantic division shows a slow but steady upward trend since Q2 2008.

Arm & Hammer's unit sales breakdown by region

100% 90% WEST SOUTH CENTRAL DIVISION \$2 MM WEST NORTH CENTRAL DIVISION \$2 MM SOUTH ATLANTIC DIVISION \$2 MM PACIFIC DIVISION \$2 MM NEW ENGLAND DIVISION \$2 MM MOUNTAIN DIVISION \$2 MM 23.93% 29.28% 25.97% 27.64% MIDDLE ATLANTIC DIVISION \$2 MM EAST SOUTH CENTRAL DIVISION \$2 MM EAST NORTH CENTRAL DIVISION \$2 MM

80% 70% 60% 50% 40% 30% 20% 10% 0%

19.55%

19.34%

21.04%

21.52%

2007

2008 Year

2009

2010

10

7. For the most recent years panel data, is there a demographic group for which your brands index is high? Is there a demographic group for which your brands index is low? Briefly explain why this finding makes sense to you. Arm & Hammer indexes very well with Older Bustling Families (145.72) and Empty Nest Couples (127.16). Older Bustling Families is one of the most frequent purchasers of laundry detergent, with category index of 164.37, so all brands across the board index well with this group. However, Empty Nest Couples have a category index of 104.9 and an A&H brand index of 127.16, which suggests that this particular group is specifically interested in the Arm & Hammer brand. At first glance, it would appear that Arm & Hammer is weakest with three demographic groups: Independent Singles (50.09 index), Young Transitionals (80.09) and Senior Singles (74.06). However, those three demographics groups have an index of 80 or below across every detergent brand as well as the category as a whole. It appears that those three groups purchase Heavy Duty Liquid Laundry Detergent proportionally at a much smaller rate than their relative size of the population. Young Transitionals most likely purchase detergent infrequently, as they continue to do their laundry at their parents house or at a Laundromat. Independent singles frequently live in urban areas and rely on Laundromats and drop-off service for their laundry needs. Senior singles may live in assisted living communities or with their adult children, which would limit the amount of detergent they purchase. Additionally, it is also possible that some of these groups purchase laundry detergent in other formats, such as powder. Conclusion The Nielsen data outlined in this GP2 Report highlights what happened in consumers homes and in stores with A&H and the broader detergent category from October 2007-October 2010. This information complements the exploratory research in GP1. In particular the GP2 data provides more insight into the overall trend that since 2008, economic considerations have played an important role in purchase decisions. The Nielsen data in addition to the survey data we collect in GP3 will allow us to seek insights into the following issues of interest: 1) Why Church and Dwight Co. saw the highest positive increase in shares in 2011-2012 while other companies sales mainly stayed flat or even went down. 2) Consumer interest for an A&H free and clear or odor-free detergent.

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