see the attached file

Marketing Management

Mr. Ford, tired of selling oatmeal for years, is currently thinking of entering the cornflakes market in Michigan with a new brand called Helloggs. Mr. Ford has estimated brand awareness to be approximately 90%, because the brand will enjoy high local TV and point-of-purchase promotion budgets. For manufacturing and marketing Helloggs, Mr. Ford would have to spend $100,000 towards fixed costs. Just one supermarket chain, which alone sells 35% of total cornflakes sold in the target market, will carry the brand. According to Mr. Ford, this brand, to be priced at $5.00 for a 1-lb. pack, will sell enough to carry his company out of the red. A Marketing Research agency appointed by Mr. Ford has contacted a sample of households to get `Intention to buy' information for Helloggs. The agency reports that, given 100% awareness and availability, the percentage of respondent households who have given different ratings for `intention to buy' on a 11-point scale (ranging from 0 = `would definitely not buy' to 10 = `would definitely buy') is given as follows:

Mr. Ford 's cost accountant reports that the variable cost for 1 lb. of Helloggs comes to $2.50. If the target market in Michigan consists of 100,000 households each buying a 1 lb pack every two weeks, answer the following questions:

1) What is the total sales forecast would you project for Helloggs for the current year?

2) Do you think Mr. Ford should introduce this brand in Michigan? Explain why you come up with your conclusion.

3) Are there any other information that you would include for concluding your recommendation?

Justify your answers with suitable calculations. Show your work. Please upload your typed response. Handwritten submission will not be accepted).

HINTS:

• To calculate the expected demand (yearly sales forecast), you need to calculate “the number of households expected to buy the product”.

• You need to consider the awareness and availability.

• When market research company conducted the study, the findings were based on 100% awareness and availability of the product.

First, you need to consider “the number of households expected to buy, given 100% awareness & availability”.

As you can see from the survey result, not everyone has the same intention to buy the product. Therefore,

1) you need to first calculate the expected number of individuals within each response scale, given the fact that the total number of households is 100,000.

How many households are expected to fall into response 1, 2, 3, 5, and 8? How would you calculate that? The hint for this comes from the table provided in the question.

2) after that, you need to think about whether people who respond to 1 have the same intention of purchasing the product compared to the ones who are with the response scale '8'. The answer to this question would be, as you expect, is "no."

HINT: To address the issue, you can think about the 0-10 scale as % of purchase intention. For instance, those who respond to '10' means that they are 100% sure that they will try the product. In other words, those who respond to '8' means that 80% of the time they are willing to purchase the product. You need to consider these two factors to calculate the number of households expected to buy, given 100% awareness & availability.

By considering these two factors, you can recalculate the number of households expected to buy the product given 100% awareness & availability.

However, the market research company assumes that the awareness of the product is 100%. You need to consider the actual awareness and availability of the product.

HINT for actual awareness: Although the market research company conducted a study with an assumption of 100% awareness, the actual brand awareness is approximately 90% only. 

HINT for actual availability: don't forget the actual availability of the product (read the description below). What would be the availability of the product among the target market?  

“Just one supermarket chain, which alone sells 35% of total cornflakes sold in the target market, will carry the brand.”