For the course of Marketing Analytics at Maastricht University, we had to write an advisory report for Verhouten (a chocolate company) in which we elaborated on building a statistical and dynamical model, competition, control variables as well as price elasticity.
3. THE MODEL............................................................................................................. 3
3.1 Price Elasticities.............................................................................................3
3.2 Control Variables............................................................................................5
3.3 Competition....................................................................................................7
3.4 Dynamic Model..............................................................................................9
4. VALIDITY................................................................................................................ 11
5. CONCLUSION........................................................................................................ 13
5.1 Critical Reflection.........................................................................................13
5.2 General Conclusion......................................................................................13
5.3 Limitations, and Future Research Recommendations..................................14
REFERENCES............................................................................................................ 15
APPENDIX.................................................................................................................. 16
, 1. INTRODUCTION
Founded in 1899, Verhouten is a chocolate factory based in Haarlem, in the
Netherlands. The company is family-owned and has been growing steadily. Presently,
Verhouten produces four types of products, namely chocolate bars, candy bars, specialities
and seasonal products. Verhouten’s products are distributed by a myriad of channels and the
supermarket chains Albert Heijn and Jumbo represent the most important supermarkets for
the company. The main focus of this report is on the 100 gram Verhouten chocolate bars sold
at Albert Heijn. Moreover, there are other brands also selling a 100 gram chocolate bar at
Albert Heijn, including Droste, Baronie and Delicata. These brands are the key competitors
of Verhouten.
Verhouten has been continuously promoting chocolate bars and such promotions have
translated into a total of twenty five percent of the annual sales. In turn, consumers form price
expectations based on the existence of promotion sales. As stated by Van Heerde et al.
(2000), a regular use of promotions reduces consumers’ purchases before and after these
events due to the increased purchases derived from such promotions. Furthermore, Van
Heerde et al. (2000) expect increased sales during periods such as Christmas time, since the
majority of customers buy chocolate bars to share or to give-away as a gift.
This report has as its main focus the examination of the variables that have an impact
on the sales of the chocolate bars of Verhouten. In this way, throughout the report various
models that describe the influence that chocolate bars have on the company’s sales will be
presented, each model building further on the previous one. As a starting point, the data used
throughout the analyses will be evaluated and the descriptive statistics will be interpreted.
Further on, a model representing the impact of price on sales through price elasticity will be
developed. After, a second model will be developed and control variables will be added in
order to demonstrate how environmental events can impact the sales of the chocolate bars and
the company’s promotion sales. Later on, a third model will be developed and will account
for competition by considering competitors’ variables, namely the price and the feature and
display promotions. Subsequently, a fourth model considering dynamic effects over time will
be developed, as opposed to the first model, which only accounted for the influence of price
on sales. Lastly, the predictive validity of the model with the best performance will be tested
and some critical insights and conclusions will be drawn.
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