ANALYSIS OF ROUND 0 & PLAN FOR ROUND 1

Team Name: TRIUMPH

I.

Key Performance indicators of TRIUMPH

Period 0 (all units in thousands of dollars)
1. Share price index- 1000
2. Sales Revenue- 58,691
Revenues received from TONE 43,315
Revenues received from TOPS 15,376
3. Market share by Units 21.7%
Market share by Units for TONE - 14.9%
Market share by Units for TOPS - 6.9%
4. Market share by value 26.9%
Market share by value for TONE 19.8%
Market share by value for TOPS 7.1%
5. Net contribution 18,070
Net contribution by TONE 17,166-101.5(Market research cost) =
17,064.5
Net contribution by TOPS 1,106-101.5(Market research cost) =
1,004.5
6. Contribution after marketing 18,272
Contribution after marketing by TONE 17,166
Contribution after marketing by TOPS - 1,106
7. EBIT 18,070

II.

Segment Unit Sales

Savers
Current unit sales in savers is 283,000 units. The market is expected to grow at a
growth rate of 33.7% in the next year and at a average of 27% for the next five years
which would lead to approximately 935,000 units of market potential in this segment.
Explorers
Current unit sales of Explorers is 204,000 units and it is expected to decline by 0.5%
in the next year which would lead to a decrease in market potential to 203,000 units.

It is further expected to continue decreasing at an average rate of 2.8% in the next

five years. This would eventually decrease the market size to 177,000 units.

Shoppers
Current market size is of 163,000 units. It is expected to grow at a tremendous rate
of 39.1% and the market size by units would reach 226,000 units by the next year
and it is expected to grow at an average rate of 35.6% for the next five years making
the market size by units to 746,000 units. Every company should target this segment
as it is the fastest growing segment.
Professionals
Current market size of professionals is 149,000 by units and it is expected to grow at
23% increasing the market size to 183,000 units. In the next five years it is expected
to grow at a rate of 15.9% which would lead to increase in market size up to 311,000
units. This is a very attractive market as the profit margins are high in this segment.
High Earners
Current market size is of 127,000 units. It is expected to grow at a rate of 28.4% and
the market size by units would reach to 163,000 units by the next year and it is
expected to grow at an average rate of 21.6% for the next five years making the
market size by units to 339,000 units.

III. Identification of proximity of our brand

Target Market:
Product

Primary target

Secondary Target

TONE

High Earners

Professionals

TOPS

Explorers

Shoppers

TONE is currently the market leader in High Earners segment with a market
share of 49.6% by this segment. LOOP is the closest competitor (challenger)
in High Earners segment with a market share of 32.3% in this segment.
ROCK is a follower in this segment with a market share of 15% in the high
earners segment.
TOPS is the market leader in in Explorers segment with a market share of
22.7% in this segment followed by ROCK and LOOP with a market share of
17% and 13.9% respectively.

Shoppers segment is dominated by SOLO with a market share of 24.6% and

the closest challenger to it is MOST with a market share of 17.2% followed by
SOFT with a market share of 12.2% in this segment.
ROCK is the market leader in Professionals segment with a market share of
31.3% and the closest challengers are LOOP and TONE with a market share
of 26.1% and 24.3% respectively.
Savers segment is dominated by MOST with a market share of 47.4% and
the challenger in this segment is SOFT which has a market share of 28.2%
followed by LOCK with a market share of 15% in this segment.

IV. Review of Ratios of Triumph

Ratio Considered(W.R.T
Revenue)

Firm (In Percentages)

TONE (In
Percentages)

TOPS (In
Percentages)

COGS
CONTRIBUTION
CONTRIBUTION
AFTER
MARKETING
EBIT
ADVERTISING
COMMERCIAL
TEAM
COST
MARKETING RESEARCH
AND R&D

59
40
31

54
46
40

74
24
7

31
7
2

39
4
1

7
12
4

0.35

0.2

0.7

Note: To calculate EBIT for each product, half of total marketing research
expenditure has been deducted from contribution after marketing for both products.

Inferences from Ratios

The COGS to revenue ratio is 59% which means cost of production is the
biggest expenditure for and also that our gross margin ratio stands at 41%
which is a decent figure for us. When we look at the products, this COGS ratio
decreases to 54% in TONE and increases to 74% in TOPS which is mainly
due to the fact that TONE is targeted to the premium segment whereas TOPS
is targeted to the mid segment.
The contribution (gross margin) and contribution after marketing ratio are 40%
and 31% respectively which is because of our 9 % expenditure on advertising
and commercial team activities. The decrease in contribution after marketing
is steeper in case of TOPS than in case of TONE indicating potential
inefficiencies in its marketing mix.

The EBIT is almost equal to contribution after margins and it is so because no

R&D work was undertaken in Period 0. Going forward, we plan to indulge in
R&D activities due to which EBIT may decrease.

V. Objectives
1. Firm Level Objectives
i) Increase the overall unit market share to 24%.
ii) Maintain the overall value market share at about 26%.
iii) Maintain our net contribution after marketing to 30%.
2. Objectives-TONE
i) Marginally increase the unit market share to 15%.
ii) Maintain the overall value market share at about 19%
iii) Retain the contribution and contribution after marketing at 46% and 44%
3. Objectives-TOPS
i) Increase the unit market share to 9%.
ii) Increase the value market share to 8%.
iii) Increase the contribution to 27% and contribution after marketing to 10%.

VI. Sales and Production Plan

Production volume of TONE = 175000 units

Production volume of TOPS = 89000 units

Note: The production plan aims at keeping 1% inventory at the end of period 1. Also
opening inventory of TOPS has also been considered in the production plan.

VII.Price Changes

TONE- No price change.

TOPS- Reduce the price to $300

Expected Actions of Competitors

For TONE the closest competitor is LOOP. Their expected actions are

Since the product is targeted at premium segment we do not expect them to

decrease the price of product.
Also since R&D is not open in Round 1 we expect them to invest heavily in
the advertising aimed at high earners and professionals.

For TOPS the closest competitor is SOLO. Their expected actions are-

The base cost of SOLO is very low and hence they can decrease their prices
significantly to gain more market share.
The production cost of both their product is expected to be very low because
of low base cost of both products and hence they can invest heavily in both
advertising and can also increase their presence in the mass merchandizer
channel.

VIII. Advertising Awareness Review to finalize Advertising in next round

TONE
Since we are not changing price or specifications, we will continue to target this
product to the same consumer segments (High Earners and Professionals). Now, the
brand awareness is already 63% among High Earners which is quite high comparing
awareness of other brands but our other target segment viz. Professionals have
brand awareness of 56% above which there are 3 more bands having high
awareness. Thus, we will allocate more budget for advertisement among
Professionals in Round 1.
However, we may reduce advertising budget for TONE among professionals after
launching a separate product for them.
TOPS
We will reduce its price by 20-30% to target both Explorers and Shoppers as of now.
But as per Consumer Survey report, the brand awareness is very low among both
the target segments i.e. only 43% among Explorers and 38% among Shoppers.
Thus we need to allocate more budget for TOPS than TONE. Again we will allocate
more proportion of budget of TOPS among Shoppers and then among Explorers in
Round 1.
However, we may reduce advertising budget for TOPS among Shoppers after
launching a separate product for them.

IX. Use of the Purchase Intent data for evolving strategy

Increasing brand awareness is not the only goal when targeting a consumer
segment. The Purchase Intent Data provides us with figures as to which consumer
segment actually intends to buy our products out. This will help us to specifically
target those segments and increase our penetration there. Our aim will be to
maximize the purchase intent among the targeted segments.
TONE
The primary target segment for TONE is High Earners and the purchase intent is
also highest (49%) among this segment. But for secondary target segment
(Professionals), the purchase intent is somewhat low (23%). This may be due to
various reasons viz. product specifications didnt match for Professionals or may be
due to low brand awareness among them.

So, for Round 1, we will increase its brand awareness among Professionals. If it
didnt work, then may be in later round we will plan for different strategies.
TOPS
The primary target segment for TOPS is Explorers and the purchase intent is also
highest (22%) among this segment. But for secondary target segment (Shoppers),
the purchase intent is lowest (4%). However, the brand awareness of TOPS is low
among Shoppers but purchase intent is lowest. It means its specifications didnt
match for them among which one specification may be Price.
Thus we are reducing price in Round 1 so that purchase intention may get increase
among Shoppers. If it doesnt work, then we will plan for different strategies in
subsequent rounds.

X. Use of distribution data to make changes in commercial team

In Distribution Report, % Sales (in terms of volume of units sold) by different channel
for different brands are given which reveals the allocation of commercial team
needed for different channel.
This can be illustrated as below:
TONE
For TONE, Specialty Stores has maximum sales which is 19%, followed by Online
Stores which has sales of 18% and then Mass Merchandisers has sales of only 9%.
Thus Commercial team allocation will be proportionate to these % sales.
Now total number of person allocated for TONE will depend upon number of outlets
of different channel. Higher the number of outlets, more will be the number of
persons allocated.
TOPS
Similarly for TOPS, Specialty store accounts for 10% of its sales followed by 7% by
Online Stores and only 3% by Mass Merchandisers. Again, the allocation of
commercial team among different channel will be proportionate to these % sales.
In this case also, total number of persons allocated will depend upon total number of
outlets of each channel.