7. Using a method for estimating market share similar to the A*A*A and BASES models, an marketer of after-market smartphone warranties believes that s/he can generate 2% awareness and make the product available to 90% of the target market. First, specify the model’s missing parameter then state what its level must be if s/he is to reach his or her break even volume of 4% market share. Finally, explain to this marketer what s/he must do to reach the 4% market share goal.
The market share attraction model uses the following parameters
Market share of the brand, time or period (t) for the brand to meet the market share
For the company to easily determine the market share, it has to include the typical predictor variables such as price, distribution, duration and advertising spending. Therefore, this model will have to set the company’s distribution as it predicts the ability of the company to meets the desired demand levels. The marketer should have set the specific period over which she meant to acquire the specific market share. Therefore, in order for her to meet her or his breakeven volume of $% of the market share, she was supposed to use two years because the 2% awareness of the smart hope warranties only made up a small portion of the requirement for increasing the markets share (Cooper, & Nakanishi, 1988).
Finally, explain to this marketer what s/he must do to reach the 4% market share goal.Therefore, the company should set an optimal distribution level of 90% and minimum distribution level of at least 50% to reach 90% of the target market. 90% is more realistic as no company has been able to realize 100% distribution over a specific period. The marketer cannot reach the break-even volume of 45% of the market share because the 2% market awareness is lower
Therefore, for a company to reach his or her break-even volume of 4% of the market share, she must increase the duration over which she could deploy her marketing
Market share= attractions of the brand/ the sum of all attractions at time t
Attraction of the brand=markets share/sum of all attraction at time t
Attraction =4%/2%x2 years
The marketer will only meet the 2% of the market share in two years. Therefore, she should set realistic time period for her to meet 4%. This should be at least 4 years.
Cooper, L. G., & Nakanishi, M. (1988). Market share analysis: Evaluating competitive
marketing e®ectiveness. Boston, MA: Kluwer Academic Publishers