MIS784: Marketing Analytics Assignment - SONY Curved TV Report

This report analyzes the Australian market for SONY curved TVs, focusing on consumer preferences and market share. The methodology includes conjoint analysis to determine the importance of various TV attributes like screen size, brand, refresh rate, resolution, and price. The analysis identifies t...Read More

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SONY CURVED TV AUSTRALIAN MARKET ANALYTICS
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SONY Curved TV Australian Market Analytics
Methodology and Findings
Part 1: Importance of TV Attributes
In determining the importance of different curved TV attributes in determining
consumers’ preferences, four main procedures were performed in an excel sheet. The
characteristics of the curved TV's considered in the case study include screen size (65, 75 and
85 inches), Brand (Samsung, SONY and LG), Refresh rate (120, and 240 Hz), Resolution
(4000, and 2160 pixels) and price ($4000, $6000, and $9000). The first step in the analysis
involved the estimation of regression coefficients for each respondent (a total of 20
respondents) (Svetlana, 2018). The factors estimates indicate how likely the consumers will
buy the given product profiles. The estimates were then presented as parts worth in excel
sheet (Data). However, for the report purpose of the reporting, the average part-worth
estimates were calculated and shown in table 1.
Part-worth Attribute Average Estimate
Screen size
65 -0.28
75 0.22
Brand
Samsung -0.36
SONY 0.05
Refresh rate 120Hz 0.50
Resolution 4000 pixels -0.11
Price
$4,000 1.26
$6,000 0.03
Table 1: Average Parts-worth Parameter Estimates.
The results show that a unit increase in the screen size for 65 inches TV will reduce
the consumers' preferences by an average of 0.28 units in Australia. Next, a unit increase in
screen size for 75inch TV will increase the consumer preference by 0.22 units in Australia.

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However, for the brand, a shift from Samsung will reduce consumers prefer to purchase
curved TV by an average of 0.36. Next, a change from a SONY brand will increase
consumers prefer to purchase curved TV by 0.05 units (Svetlana, 2018). A unit increase in
refresh rate above 120Hz result in an increase in consumer preferences to purchase curved
TV by 0.50 units while an increase in the resolution from the base of 4000 pixels reduces
consumer preferences by -0.11 units. On price, a price of $4000 increase consumer
preferences by 1.26 units while an amount of $6000 increase the choice by 0.03 units.
The second step involved the determination of the importance of parts-worth using the
calculation of the reference level of parts-worth. The calculation was based on the
multiplication of the estimated parts-worth coefficient and the weight for the existing brands
in Australia (Dobney, 2019). The third step entailed calculation of range the parts-worth —
the difference between the maximum and the minimum. Finally, the importance of different
curved TV attributes in determining consumers’ preferences was calculated as parts-worth
range divided by the total of the parts-worth range. The results of the importance are
presented in table 2.
Attribute Average Importance (%)
Screen size 15.4%
Brand 17.2%
Refresh rate 19.7%
Resolution 9.4%
Price 38.3%
Table 2: Average Importance of Attribute in Preference
On average screen size, brand, refresh rate, resolution, and price of curved TV account for
15.4%, 17.2%, 19.7%, 9.4%, 38.3% respectively of the preference to purchase a curved TV
by an Australian consumer (Dobney, 2019). Resolution accounts for a small percentage of

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preference hence SONY decision of selling only 4000-pixel resolution is supported by the
available data on consumer behavior.
Part 2: SONY Curved TV Profile
The process of identifying the product profile for SONY, which is likely to get the
highest market share was performed in three steps. The first step involved the identification
of SONY curved TV product profiles based on the restrictions given in the case study. SONY
has decided that it can offer only 4000 pixels TVs at a refresh rate of 120Hz but is flexible in
terms of TV size and price. Table 3 shows the product profiles formulated using the existing
products (LG 65inch 120HZ 4000 pixels at $4000, and Samsung 85in 120HZ 4000 pixels at
$9000).
Brand Screen size
(inch)
Refresh rate
(Hz)
Resolution
(Pixel)
Price ($)
Sony 65 120 4000 4000
Sony 65 120 4000 6000
Sony 65 120 4000 9000
Sony 75 120 4000 4000
Sony 75 120 4000 6000
Sony 75 120 4000 9000
Sony 85 120 4000 4000
Sony 85 120 4000 6000
Sony 85 120 4000 9000
Table 3: SONY Product Profile
The second step involved the calculation of parameter estimates for each respondent
based on the values obtained in part 1 (Foley, 2018). Sum of the individual attribute was used
as the product profile estimate. The final step involved estimation purchase probabilities of
each new product with respect to two existing products in the market using the formula:

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product probability = exp (Sony product )
exp ( Sony product )+ exp ( Samsung product )+ exp (LG product )
The average market share for each SONY product is presented in table 4.
Product Market Share (%)
Sony, 65, 120, 4000P, 4000 57.15
Sony,65,120,4000P,6000 31.27
Sony,65,120,4000P,9000 12.77
Sony,75,120,4000P,4000 64.80
Sony,75,120,4000P,6000 42.55
Sony,75,120,4000P,9000 19.82
Sony,85,120,4000P,4000 61.79
Sony,85,120,4000P,6000 37.44
Sony,85,120,4000P,9000 15.61
Table 4: Sony Product Market Shares.
From table 4, Sony curved TV with a screen size of 75 inches, refresh rate of 120Hz,
resolution of 4000 pixels, and price of $4000 has the highest market share of 64.80%.
Part 3: Calculation of Profit
The profits are estimated based on the following scenario:
SONY has estimated that the potential size of its market in Australia is 100,000
consumers, and each consumer buys one unit on average. Fixed cost for starting production is
$2,000,000. SONY has a base variable cost of $800 per TV; the additional variable cost for a
75in size is $600 per TV, and 85in size is $1000 per TV. The formula for the calculation of
the profit is as follows (Qualtrics, 2019):
Profit = Sales * (Price – total variable cost) – fixed cost.
Where:
Sales = Market share * Market size

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Total variable cost = Base variable cost + additional variable cost (if required for the product)
Table 5 shows the final results of the calculation.
Product profile
Market
share
(%)
Base
cost
($)
Feature
cost ($)
Total
variable cost
($) Sales
Price
($) Profit ($)
Sony,65,120,4000P,4000 57.15 800 0 800 57148 4,000 182,873,177
Sony,65,120,4000P,6000 31.27 800 0 800 31273 6,000 162,618,188
Sony,65,120,4000P,9000 12.77 800 0 800 12768 9,000 104,694,555
Sony,75,120,4000P,4000 64.80 800 600 1,400 64797 4,000 168,473,356
Sony,75,120,4000P,6000 42.55 800 600 1,400 42549 6,000 195,725,582
Sony,75,120,4000P,9000 19.82 800 600 1,400 19819 9,000 150,622,055
Sony,85,120,4000P,4000 61.79 800 1,000 1,800 61786 4,000 135,930,014
Sony,85,120,4000P,6000 37.44 800 1,000 1,800 37444 6,000 157,262,962
Sony,85,120,4000P,9000 15.61 800 1,000 1,800 15605 9,000 112,357,243
Table 5: Profit Based on Scenario Estimates
The product that will offer the largest profit for Sony company in Australia is the
Sony curved TV with a screen size of 75 inches, refresh rate of 120Hz, resolution of 4000
pixels, and price of $6000. The likely market share of this product is 42.55%.
Recommendation
Sony electronics company is a for-profit establishment; thus, significant decisions
should be pegged on the profit to the company. The product with the largest market share is
Sony 75in 120Hz 4000Pixel at $4000, however, given the production parameters the product
which gives the highest profit is Sony 75in 120Hz 4000Pixel at $6000. From the analysis of
the important attributes, price is a crucial determinant of consumers preferences. This
indicates that Australian curved TV consumers are price sensitive; thus, an increase in the
price from $4000 to $6000 results in market share decline from 64.80% to 42.55%.
Therefore, given the large profit from Sony, 75in, 120Hz, 4000Pixel, at $4000, the company
should produce and sell only this product. However, more market analysis and research are
needed to identify other factors that might act in favors of Samsung and LG.
Moreover, companies producing TVs are competing daily to outmatch their
competitor. The main aspect of the product that consumers prefer brands with reputable

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warranty periods and services. The argument for such behavior is to ensure that their prized
possession is well taken care of should anything go sideways (Canstar, 2019). Sony being a
bigger brand, the consumer can mostly expect to get what you they pay for, have a good
reputation for a good reason.
References

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Canstar, B. (2019). TV Reviews Australia | 2019 Brand Ratings & Guide – Canstar Blue.
[online] Available at: https://www.canstarblue.com.au/technology/tvs/ [Accessed 18
Sep. 2019].
Dobney (2019). Conjoint Analysis - introduction and principles. [online] Available at:
http://www.dobney.com/Conjoint/Conjoint_analysis.htm [Accessed 18 Sep. 2019].
Foley, B. (2018). How To Conduct Conjoint Analysis on Survey Data | SurveyGizmo Blog.
[online] Available at: https://www.surveygizmo.com/resources/blog/conjoint-
analysis/ [Accessed 18 Sep. 2019].
Qualtrics. (2019). Pricing Research Using Conjoint Analysis | Qualtrics. [online] Available
at: https://www.qualtrics.com/experience-management/product/pricing-conjoint/
[Accessed 18 Sep. 2019].
Svetlana, C. (2018). Linear regression analysis in Excel. [online] Available at:
https://www.ablebits.com/office-addins-blog/2018/08/01/linear-regression-analysis-
excel/ [Accessed 18 Sep. 2019].