Question 1 (a)Total Volume 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 (b)Total Spending 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)Competition 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.
In addition, Rocket Soup performed promotion on week 13, 16 and 19, and yet does not significantly increase any sales due to the previous high sales volume in week 12. Question 3 Although the general price and demand curve in economic would suggest the demand will increase when price is low, there are no significant relationship observed between sales volume and price when no promotion was conducted. The average price without promotion was 0. 90 and the standard deviation was only 0. 128.
On the other hand, the average volume sold was 392 with a standard deviation of 129. 16, meaning it is relatively more randomly varied. In addition, the correlation between the two variables is only 0. 0128, meaning that it has almost no linear relationship altogether. Thus, it is safe to argue that there are no noticeable relationship between price and volume without promotion. Question 4 Unlike price and volume relationship with no promotion, there are a noticeable relationship between price and volume with display promotion.
In week 37, the price with display was the lowest among 40 weeks, priced at 0. 74, and sold the most volume of 2,409. Also, week 8 and 34 showed the lowest sales, when price was charged higher. In other words, the price and volume relationship with display promotion does follow general economic principle of supply and demand, and it has inverse relationship. Correlation of price and volume with display promotion was -0. 486, meaning that it is negatively related, and does sell more when price is low, and vice versa.