Peppy Pet Company, a large manufacturer of pet food products, conducted a study in 2001 in order to assess how its brand of dog food was faring in the market. Questionnaires were mailed to a panel of 1,260 families with a dog. The Peppy Pet brand had three major competitors: Brand A, Brand B, and Brand C. A similar study conducted in 2000 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 families). 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 families; Brand C now had a share of 9.52%, or 120 families). The management of the Peppy Pet Company decided it had little to worry about.

The 2001 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. Finally, 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 estimated 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?