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MCPL: Brand Switching Analysis and Forecasting using Markov Chain Model

CASELET, BUSINESS ANALYTICS
ET Cases , 6 Pages
AUTHOR(S) : R. Muthukumar and Dr. Nagendra V. Chowdary

Case Preview

MCPL: Brand Switching Analysis and Forecasting using Markov Chain Model

 

Modern Cars Pvt. Ltd. (MCPL) founded in June 2011, was counted among one of the renowned auto dealers in Chennai. MCPL was setup by Ramakrishnan Chettiyar (Ramakrishnan), a commerce graduate from one of the prominent institutions in Chennai. Ramakrishnan joined Maruti Suzuki as Graduate Trainee in 2000 and worked his way up to become a successful Marketing Manager by 2010.

However, encouraged by the buoyant demand for automobiles and entrepreneurial urge, Ramakrishnan decided to be a first-generation entrepreneur. Quite intrigued and emboldened by his entrepreneurial mission, Ramakrishnan decided to start an auto dealership company and thus MCPL was born in 2011............

Exhibits

Exhibit I: Product Range at MCPL

Exhibit II: Each Car’s Sales Data (No Promotion)

Exhibit III: Probability Transition Matrix

Exhibit IV: Each Car’s Sales Data (Under Promotion)

Exhibit V: Initial Probability Distribution Matrix (no promotion)

Exhibit VI: Initial Probability Distribution Matrix (under promotion)

Teaching Note Preview

MCPL: Brand Switching Analysis and Forecasting using Markov Chain Model

 

Synopsis

This caselet analyses the consumer choice behaviour in the case of purchase of car brands at Modern Cars Pvt. Ltd. (MCPL). The MD of MCPL, Ramakrishnan Chettiyar (Ramakrishnan), was deliberating on whether promotions have an impact on brand switching and customer retention or not. Moreover he wanted to forecast the sales or market share in the short term. While answering these questions, this caselet helps understand Markov chain based decision making.

Prerequisite Conceptual Reading

The students/participants must be encouraged to read the following before the session:

• Styan and Smith Jr., Markov Chains Applied to Marketing, Journal of Marketing Research, 1964.

Case Positioning and Setting

This case can be used in MBA or Executive Programs to teach the courses such as business statistics and Marketing Analytics – to understand and get insights from Markov chain model and probability.

Assignment Questions

I. Can the brand switching problem described in the caselet be analyzed using Markov model? What assumptions are made in this analysis?
II. What inferences can be made from Exhibits II and III regarding switching between brands?
III.............

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Abstract

This caselet can be used to teach the students/participants the relevance of Markov Chain Model for forecasting in a brand switching situation. Written in the backdrop of consumer purchase behaviour of one of the (Celerio) car brands at Modern Cars Pvt. Ltd. (MCPL), this caselet enables an interesting discussion on how can the company arrive at an appropriate decision using Markov Chain Model. Ramakrishnan Chettiyar (Ramakrishnan), MD, MCPL, was deliberating on whether promotions would have any impact on brand switching and customer retention. In addition, Ramakrishnan wanted to forecast the sales in the short-term.



Pedagogical Objectives

  • To discuss and understand the impact of promotions on brand switching
  • To discuss and understand the use of Markov Chain Model in brand switching and forecasting
  • To discuss and debate, based on Markov Chain Model analysis, whether MCPL should promote Celerio brand or not

Case Positioning and Setting

This caselet can be used in either of the following courses/programs:

a. MBA Program: Statistics For Management/Business Statistics course – To understand the relevance & application of Markov Chain Model in forecasting a brand switching

b. MBA Program: Marketing Analytics course – To understand the relevance & application of Markov Chain Model in forecasting a brand switching



This Case Pack Includes:
- Abstract
- Caselet
- Teaching Note (**ONLY for Academicians)
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