One of the most notable patterns of sales in regards to total sales volume is that it increases drastically when the average price of soup is low (Average price is calculated by dividing Category Volume by Category Dollars). Total sales volume had significantly increased when either Rocket Soup or competitors (or both) offer low price for promotion. In other words, soup consumption is relatively elastic to price, meaning that customers are highly sensitive to price. See below graphs showing the inverse relationship between the total volumes sold and average price of soups.
Category Volume sold in Week 1 to 40
Average Soup Price in Week 1 to 40
Sales pattern in terms of total spending follows the pattern observed in total volume section. One notable difference is that the total spending per week is relatively more concentrated closer to the average total spending in 40 weeks (5,263), meaning it is not as elastic as the volume. It means that customers may purchase more soups when the price is lower, but does not dramatically increase their total spending, even if the price is very low. It can also be observed that the total spending (or revenue) does increase when the total volume sold are relatively larger, with the exception of week 12, where Rocket Soup charged unbelievably low price (0.04). (c)
Another notable pattern is that the sales volume of Rocket Soup is significantly affected by competitors’ price and sales volume. When Rocket Soup offers cheaper price, the sales volume of Rocket Soup increases and competitors temporarily lose market share, and vice versa. It would represent that the size of the market is relatively capped and cannot expect a drastic increase over time. (d)
Sales Volume after high volume weeks
In general, the average sales volume after high volume weeks is lower than the average category volume. From the table 6-3, it can be observed that the average...
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