AATR Model Note (Chapter 10) Flashcards
What does AATR stand for?
Awareness-Availability-Trial-Repeat Model
What is another name for the AATR Model?
Chain Ratio Forecasting Method
What is the AATR Model?
- Applied to estimate the size of an existing or a new market
- Commonly used in markets for consumer non-durable goods (soft drink, detergent)
- Output can be utilized to estimate sales
How does this process begin?
- First identify target demographic segment (population) for the product
— often available from secondary data sources (income, age) - Second step is to estimate the AATR chain
What is Awareness?
Percentage of customers in the target demographic segment who are aware of the product (promotions)
What is Availability?
Percentage of aware customers who have the product available to them
What is Trial?
Percentage of aware customers who have the product available and are willing to try
What is Repeat?
Percentage of repeat customers among those who have tried
AATR Model gives the market size as this equation:
Market Size = (Target Population) x (%Aware) x (%To whom new product is available) x (%Who will try) x (%Who will purchase repeatedly)
Ex)
Population = 100M
Awareness = 30%
Availability = 20%
Trial = 20%
Repeat = 10%
0.12M = 100M x 0.3 x 0.2 x 0.2 x 0.1
How is each AATR component controlled?
- Awareness and availability are more under the control of managers
- Awareness rate controlled by amount of advertising expenditure the managers are making
- Availability is a function of the distribution channel coverage
Challenges of AATR Model (laboratory stores)
- Expensive laboratory stores generate estimates for trial and repeat
- Many other applications of this model don’t require estimates from laboratory stores
— these cases, would make estimates based on characteristics of new target market or similar existing markets
