Simulation report - Essay Example

Nam: Market Analysis Product analysis Regarding to the market analysis, the volumes for the better and best categories of the products increased over the months and showed a decrease during the holiday period, then starts to increase during the New Year, however, the good product category increases throughout the period. Any reduction in prices of all the categories resulted into volume increament.For all the categories, they showed distinctive changes in promotion, the volume in best category increases with increase in promotion, this to mean, they had to adjust in their promotion to increase their monthly volumes .

The better category otherwise showed an increase in volume with the reduced promotion that is, they were less sensitive to changes in promotion while the good category was more sensitive to changes in promotion. Volumes of best and better category changed at a faster rate up to holiday period where there was a relative decrease rate change, this was due resultant decrease in prices as volume increases. While the good category volume increase at a faster rate over the periods year in year out, this is due to the sensitive changes in the price reduction.

Product by product strategy From the market analysis, increased volume was only achieved through price reductions hence to be more competitive in the market that is, to win the game we had but to reduce the category prices to keep the high volume. Thus the future market volume will be higher as we continue to reduce the category prices. The pricing strategy was to pursuing smaller margins while achieving higher volumes, this applied for all the categories since they were all sensitive to price changes that is, any reduction in the price showed an increase in volume.

The promotional level was high on the first periods since the categories were new in the market. To select a specific product in the simulation for example, good product was as a resulted of a responsiveness to changes in prices and promotional levels. The promotional level was majorly determined by price levels of the difference categories and the volume levels .The holiday period formed the basis of our purchase period and the level of discount per unit. The profitability of the different categories was determined by the costs of producing the unit, relative market prices and the costs of promotions (Mitrega & Macieja, 2006).

Product performance Review The product by product results was as a result of the competitive decisions made by the management for instance, reducing the costs of production while increasing the volume of the categories. The gross margin changed over the periods depending on the actual BOM stocks for all the categories. The higher the actual BOM stocks resulted into more volume thus higher sales within the categories leading to higher changes in the gross margin. We should have considered the impacts of changes in promotional levels as the categories responded to a different magnitudes with different levels in promotional amounts.

Due to the increment in volumes discounts were much offered on higher purchases which resulted into a decrease operating expenses. Higher volumes also resulted into increase in inventory values of the categories. The market was merely shared by three producers namely ANDERSON, SHINGBAO and ROCKLAND who had almost equal market share and are thus forced to use almost similar pricing strategy. Due to this I would produce a higher volumes at the existing prices with minimizing cost as the major constraints and do more promotional activities so to counter the competitors and as a result there pricing would have minimum effect on the sales.

Thus the competitors would corporate as any deviation would result to negative economic conditions (Mitrega & Macieja, 2006). The pricing strategy of Anderson would rather remain the same but only to increase its volume in production as the products were much sensitive to prices. However more resources should be allocated towards the promotion of the categories. In spite of this more allocation should be made towards promotion in the good category than the better and best categories as they were price sensitive and yield much more revenues than the rest and thus purchasing more of it as it has low cost per unit hence hence more units produced leading to more revenue(Mitrega & Macieja, 2006).

Conclusion The market was dominated by three vendors each producing the various categories in good, better and best with different units in cost of purchases. However all the categories were much more sensitive to prices but the good category responded more than the rest. The categories for instance the best quality required more promotional than the rest. Due to this it was more profitable to increase the volumes of the categories while maintaining lower prices as they were more sensitive to price changes.

Thus more of the good category more of the good category were produced since it was more economical. However Andersons was given more discounts hence produced at relatively lower prices and hence to win the game it was wise to increase volumes and give up on higher prices. Work cited: Mitre?ga, Maciej. Market analysis. Katowice: Publisher of the Karol Adamiecki University of Economics, 2006. Print.