Demand Analysis Problem
DEMAND ANALYSIS PROBLEM
Larson is trying to estimate the market potential for Stacy's Pita Chips. She knows that there are 150 million snack food consumers in the U.S. market. Of these consumers, around 20% are heavy snackers, 50% are moderate snackers, and 30% are light snackers. Market research shows Larson that heavy snackers purchase 21 bags of snacks annually, moderate snackers purchase 8 bags of snacks annually, and light snackers purchase 3 bags of snacks annually, on average. Heavy snackers were very price sensitive and waited for sales or used coupons so that they paid only $1.99 for a bag of snacks. Light snackers were price insensitive and usually paid full price, $4.99, for a bag of snacks. Moderate snackers sometimes bought on sale, but sometimes paid full price, so they paid $3.49 for a bag of snacks.
Currently, only 20 million snack food consumers purchased pita chips for their snacks. Of these, 6 million were heavy users, 13 million were moderate users, and 1 million were light users. Three firms currently competed aggressively in the pita chip segment: Stacy's, which had 10 million consumers who purchased 90 million units; Lay's, which had 6 million consumers who purchased 63 million units, and Kirkland, which had 4 million consumers who purchased 80 million units. In 2008, Stacy's sales were $429 million; Lay's sales were $125 million; and Kirkland's sales were $75 million.
Q1: How big is the potential market (in consumers, units, and dollars) for salty snacks? What is the market penetration of pita chips? Based on these answers, how much growth potential is there for a company like Stacy's?
The potential market for salty snacks is 150 million consumers. About 30 million are heavy snackers, 75 million are moderate snackers and 45 million are light snackers.
Potential market in units per segment:
Heavy users:
21 bags * 30 million users= 630 million bags purchased by heavy users annually.
Moderate users:
8 bags * 75 million users
Larson is trying to estimate the market potential for Stacy's Pita Chips. She knows that there are 150 million snack food consumers in the U.S. market. Of these consumers, around 20% are heavy snackers, 50% are moderate snackers, and 30% are light snackers. Market research shows Larson that heavy snackers purchase 21 bags of snacks annually, moderate snackers purchase 8 bags of snacks annually, and light snackers purchase 3 bags of snacks annually, on average. Heavy snackers were very price sensitive and waited for sales or used coupons so that they paid only $1.99 for a bag of snacks. Light snackers were price insensitive and usually paid full price, $4.99, for a bag of snacks. Moderate snackers sometimes bought on sale, but sometimes paid full price, so they paid $3.49 for a bag of snacks.
Currently, only 20 million snack food consumers purchased pita chips for their snacks. Of these, 6 million were heavy users, 13 million were moderate users, and 1 million were light users. Three firms currently competed aggressively in the pita chip segment: Stacy's, which had 10 million consumers who purchased 90 million units; Lay's, which had 6 million consumers who purchased 63 million units, and Kirkland, which had 4 million consumers who purchased 80 million units. In 2008, Stacy's sales were $429 million; Lay's sales were $125 million; and Kirkland's sales were $75 million.
Q1: How big is the potential market (in consumers, units, and dollars) for salty snacks? What is the market penetration of pita chips? Based on these answers, how much growth potential is there for a company like Stacy's?
The potential market for salty snacks is 150 million consumers. About 30 million are heavy snackers, 75 million are moderate snackers and 45 million are light snackers.
Potential market in units per segment:
Heavy users:
21 bags * 30 million users= 630 million bags purchased by heavy users annually.
Moderate users:
8 bags * 75 million users