4-20. Seven teenagers, four boys and three girls, were given $200 each to go on

Question

4-20. Seven teenagers, four boys and three girls, were given $200 each to go on a shopping spree. An advertising agency, which specializes in youth markets, gave the teens the money. An account executive accompanied the teens while they were shopping. The agency wanted to learn not only what they bought, but also what they talked about to see what was on their minds. "It's not so much to stay in tune with trends, because trends are elusive. It's more what's really happening with teens and what's important to them"20 a. Discuss the trade-offs between sample size (7 teens), cost, and reliability of what is learned from this experiment. b. An agent accompanied the teens while they were shopping. Why didn't the ad agency avoid this expense and just look at what the teens bought?

Explanation / Answer

a. To discuss the trade-offs between sample size (7 teens), cost, and reliability, increasing the sample size would cost more. First, each additional teenager would be given $200. More importantly, the agency might have to add account executives to work with the teens. If not, the amount of detailed information that could be collected would decrease. Increasing the sample size provides a broader set of teenagers and is more likely to provide more general and accurate information about teen preferences. Collecting detailed information, however, is expensive. Thus, there is a tradeoff between cost and reliability.

b. The reason why didn't the ad agency avoid this expense is because the agency wanted to understand the thought process that the teenagers went through in selecting their purchases. For example, what altematives did they consider? What were the most important factors that led to the purchase decision, and so on? Knowing this type of information is potentially important in making advertising, new product, and other marketing decisions.

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