.

Peppy Pet Company, a large manufacturer of pet

food products, conducted a study in this past spring

in order to assess how its brand of dog food was

faring in the market. Questionnaires were mailed to a

panel of 1260 families with a dog. The Peppy Pet

brand had three major competitors: Brand A, Brand

B, and Brand C. A similar study conducted the year

before had indicated the following market shares:

Peppy Pet, 31.75% (400 families); Brand A, 25%

(315 families); Brand B, 32.54% (410 families); and

Brand C, 10.71% (135 families). The present study

indicated that Peppy Pet's market share had not

changed during the one-year period. However, Brand

B increased its market share to 36.5% (460 fa

milies). This increase could be accounted for by a

decrease in Brand A's and Brand C's market shares

(Brand A now had a share of 22.23%, or 280 fa

milies; Brand C now had a share of 9.52%, or 120

families). The management of the Peppy Pet Com

pany decided it had little to worry about.

The new study also revealed some additional

facts. Over the one-year period, 70 families from

Brand A and 30 families from Brand C had switched

to Peppy Pet. Five families from Brand B and 30

families from Brand C had switched to Brand A, while

none of the Peppy Pet users had switched to Brand

A. These facts further reassured management. Fi

nally, 45 families switched from Brand B to Brand C,

but none of the families using Peppy Pet or Brand A

had switched to Brand C. Brand C's loyalty was es

timated to be .556.

a. Do you think that the management of the Peppy

Pet Company was accurate in its analysis of the

situation? Justify your answer.

b. You are called upon to do some analysis. From the

preceding data, construct the brand-switching

matrix.

c. Indicate what this matrix reveals for each of the

brands over the one-year period.

d. Complete the following table and compute brand

loyalties.

e. What can be said about the degree of brand

loyalty for each of the four products?

At Time to Bought Bought Bought Bought Peppy Pet A B C Total Bought Peppy Pet At Bought A Time Bought B Bought C Total