ATAR (Awareness, Trial, Availability, Repeat)
In the following, an ATAR (Awareness, Trial, Availability, Repeat) model has been constructed for a restaurant, followed by a minor discussion on the factor of Price Elasticity. The A-T-A-R model takes several factors into account. The first of these is awareness of the product. We take the example of a restaurant, the products of which do not enjoy a considerable level of awareness. The A-T-A-R model assigns values to several of such factors. For this example, with a low level of awareness, we chose a five percent awareness level. The percentage of people who are expected to try out the product has been assumed to be twenty-five percent. The percentage of customers with access to the product has been assumed to be sixty-five to cater to distribution limitations. Lastly, the percentage of people expected to buy the product again has been taken as eighty-five percent.
So, if a hundred thousand people to whom a fifteen-dollar product is made available, the units sold would amount to
100,000 x 0.05 x 0.25 x 0.65 x (1 + (0.85 x 4)) = 3575 units
The number 4 represents how many times the customers buy the product again during the year. The profit per unit with a price of fifteen dollars would be fifteen dollars less the cost per unit, which has been taken to be twelve dollars. So, the profits would be
3757 x (15-12) = $10725 for the year.
In a similar way, profit per year can be calculated for potential new products so that it can be seen whether investing in it is worth it or not.
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