Question

In: Accounting

Ace Motors recently introduced a hybrid automobile named Opus. Since its introduction, this offering has achieved...

Ace Motors recently introduced a hybrid automobile named Opus. Since its introduction, this offering has achieved a 1.2% market share in this market. Ace Motors has conducted research in an effort to assess its opportunity for market share development. The table below indicates consumers' current response at each step along the share performance path for Ace Motors' Opus hybrid automobile as well as the potential performance for each of the share performance metrics:

Share Performance

Metric

Current Performance

Potential Performance

Product Awareness

0.70

0.80

Product Attractiveness

0.45

0.60

Price Acceptable

0.60

0.80

Product Availability

0.55

0.70

Service Experience

0.60

0.75

Answer each question. Include at least a couple sentences of explanation for each one.

1) What is Opus's current market share index?

2) What is Opus's market share potential index?

3) Calculate the share performance gap between the actual and desired customer response.

Solutions

Expert Solution

1) Current market share index :
Share performance depends upon the given factors
It will decide on the product sales and the market share index which is relative to some figure.
Here we would multiply the response for each factor to get Current market share index
Current market share index = (0.7 * 0.45 * 0.60 * 0.55 * 0.60 ) *100
                                                            = 6.237%
                                                              =6.24% (rounded off)
2) Market share potential index :
Similarly we can calculate Opus's market share potential index
market share potential index = (0.80 * 0.60 * 0.80 * 0.70 * 0.75) * 100
                                                             = 20.16%
3) Share performance gap between actual and desired customer response :
Share performance gap between actual and desired (potential) customer response = gap in the two share index = 20.16%- 6.24%
                                               = 13.92%


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