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Microeconomics
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Analysis of the tea industry

Analysis of the tea industry

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Microeconomics Presentation Transcript

  • 1. Demand Analysis And Forecasting Of Tea Industry
    Using Multiple Regression Model
    ADITYA KANDOI (10P064) ANIRVAN SEN (10P067) ESHA SHARMA (10P075)
    KARTHIK V (10P083) SAMBHAV AHUJA (10P107) PUNEET BINDLISH (FPM)
  • 2. Indian Tea Industry
  • 3. Snapshot
  • 4. Global Outlook
  • 5. A closer look
  • 6.
  • 7. METHODOLOGY ADOPTED
  • 8. I) MODEL SPECIFICATION
    Too many explanatory variables leads to econometric difficulties:
    a) Less Degree of Freedom b) Multicollinearity
  • 9. II) DATA COLLECTION
    a) Prices of Tea
  • 10. b) No. of Customers
  • 11. c) Price of Sugar (Complementary Product)
  • 12. d) Consumer Income
  • 13. CONSOLIDATED DATA
  • 14. DEMAND EQUATION
    Qx = c + c1*Price + c2*No_customers + c3*Price_sugar + c4*Price_coffee + c5*Income + e
    C’s
    e
    Qx
  • 15. REGRESSION RESULT
  • 16. ANALYSIS
  • 17. ANALYSIS contd…
  • 18. REGRESSION REVISITED
  • 19. ANALYSIS REVISITED
  • 20. ANALYSIS contd…
  • 21. Demand Forecasting
    Using Eview5, a graph is drawn for forecasting the demand of tea.
  • 22. Outlook
  • 23. Economics Defied
    • Rising Production levels should result in lowering of prices
    • 24. On the contrary, prices continue to harden
    • 25. Reasons ------------------
    Increase in consumption
    Demand for Restocking
    Excessive Rains in some parts of India
  • 26. Pricing Strategies
    Important Strategic issue related to product positioning
    It affects other elements such as product features, channel decisions & promotions
    How to determine it
  • 27. Methodology
  • 28. Closer Look
    Marketing Strategy & Marketing Mix
    • Target Market Selection
    • 29. Product Positioning
    • 30. Tradeoff between quality & price
    • 31. Understanding Other Product Distribution & Promotion Decisions
    Estimate the Demand Curve
    • Demand Curve Estimated
    • 32. Price Elasticity of Demand is determined
    • 33. Inelastic Demand indicates that price increases might be feasible
  • Closer Look
    Calculate Costs
    • Unit Cost of the Product
    • 34. Variable Cost
    • 35. Fixed Cost
    • 36. Marginal Cost
    Environmental Factors
    • Competitive Standpoint
    • 37. Neither too high
    • 38. Nor too low
    • 39. Legal Standpoint
    • 40. Price Control – price ceiling
    • 41. Too Low –may be ‘predatory’
    • 42. Collusion with competitors - illegal
  • Pricing Objectives
    Maximize Revenue & Costs
    Increase Market Share & lower costs
    Decrease Long Term Costs (exp curve)
    Low Quantities (Anticipating)
    Positioning as Quality Leader
    Having other revenue sources
    Cover Costs to remain in the market
    Price stabilization to avoid price wars
    Current Profit Maximization - - - - -
    Current Revenue Maximization - - - -
    Maximize Quantity - - - - -
    Maximize Profit Margin - - - - -
    Quality Leadership - - - - -
    Partial Cost Recovery - - - - -
    Survival - - - - -
    Status Quo - - - - -
  • 43. Pricing Strategiesefied
  • 44. Pricing Strategiescontd…
  • 45. Pricing Strategiescontd…
  • 46. Pricing Strategiescontd…
  • 47. Pricing Strategiescontd…
  • 48. Pricing Strategiescontd…
  • 49. Pricing Strategiescontd…
  • 50. Pricing Strategiescontd…
  • 51. Pricing - Tea Industry
    Unorganized Sector
    • Prominent Market Share
    • 52. Majorly sold in loose packets
    • 53. Prices differ with quality & demand
    • 54. Price is largely determined by the market forces, rather than the seller himself
    • 55. A bit of cue from Cost Plus pricing in which a retail sellers obtains tea from Distributors at market rates and fixes a profit percentage to determine Selling Price
  • Pricing - Tea Industry
    b) Organized Sector
    • Controlled by Major Players like
    • 56. Brooke Bond, Lipton of HUL
    • 57. Tata Tea, Tata Agni of Tata Global Beverages
    • 58. Prices differ with brand & its positioning, target segment & quality
    • 59. Here the companies owning these brands determine the prices using various Pricing Strategies
  • 60.
  • 61.
  • 62. THANK YOU