Demand Analysis And Forecasting Of Tea Industry<br />     Using Multiple Regression Model<br />ADITYA KANDOI    (10P064)  ...
Indian Tea Industry<br />
Snapshot<br />
Global Outlook<br />
A closer look<br />
		METHODOLOGY ADOPTED<br />
		I)  MODEL SPECIFICATION<br />	Too many explanatory variables leads to econometric difficulties:<br />                   ...
		II)  DATA COLLECTION<br />a) Prices of Tea<br />
b)     No. of Customers<br />
c)     Price of Sugar (Complementary Product)<br />
d)      Consumer Income<br />
CONSOLIDATED DATA<br />
		DEMAND EQUATION<br />Qx = c + c1*Price + c2*No_customers + c3*Price_sugar +              	                     c4*Price_...
		REGRESSION RESULT<br />
		        ANALYSIS<br />
		                       ANALYSIS                                  contd…<br />
		   REGRESSION REVISITED<br />
		             ANALYSIS REVISITED<br />
		                       ANALYSIS                                  contd…<br />
Demand Forecasting<br />Using Eview5, a graph is drawn for forecasting the demand of tea.<br />
Outlook<br />
Economics Defied<br /><ul><li>Rising Production levels should result in lowering of prices
On the contrary, prices continue to harden
Reasons        ------------------</li></ul>Increase in consumption<br />Demand for Restocking<br />Excessive Rains in som...
Pricing Strategies<br />Important Strategic issue related to product positioning<br />It affects other elements such as pr...
Methodology<br />
Closer Look<br />Marketing Strategy & Marketing Mix<br /><ul><li>  Target Market Selection
  Product Positioning
  Tradeoff between quality & price
  Understanding Other Product  Distribution & Promotion Decisions</li></ul>Estimate the Demand Curve<br /><ul><li>Demand C...
Price Elasticity of Demand is determined
Inelastic Demand indicates that price increases might be feasible</li></li></ul><li>Closer Look<br />  Calculate Costs<br ...
  Variable Cost
  Fixed Cost
  Marginal Cost</li></ul>Environmental Factors<br /><ul><li>Competitive Standpoint
Neither too high
Nor too low
Legal Standpoint
Price Control – price ceiling
Too Low –may be ‘predatory’
Collusion with competitors - illegal</li></li></ul><li>Pricing Objectives<br />Maximize Revenue & Costs<br />Increase Mark...
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Microeconomics

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Analysis of the tea industry

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Microeconomics

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

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