In each of the following examples, describe how the information given about cons

Question

In each of the following examples, describe how the information given about consumer demand helped managers develop the appropriate strategies to increase profitability and how this information was obtained: a.Auto industry executives have begun to focus attention on their 20-, 30-, and 40-year-old customers, known as Generations X and Y, and away from the Baby Boomer generation. Recognizing that baby boomers are at least 60 years old, managers realize that their future depends on adapting to the tastes of younger generations. The auto industry is now offering more smartphone-driven multimedia systems and is considering increased use of autonomous driving capability. Luxury car producers are developing less-expensive models, and companies such as Toyota are redesigning their cars to be more compact, efficient, and sporty. b.Companies such as Procter & Gamble Co., Unilever PLC, and Kimberly Clark Corp. are now using retina-tracking cameras to test consumer responses to new products. Kimberly Clark wanted to know which designs on its Viva paper towels were noticed in the first 10 seconds a customer looked at a shelf. This is the period when shoppers typically place items in their carts. Research has shown that what people want to do and what they say they want to do are often quite different. Companies are making increased use of this technology and three-dimensional computer simulations of product designs due to the lower costs of this technology. Part 2 2.The following figure plots the average farm prices of potatoes in the United States for the years 1989 to 1998 versus the annual per capita consumption. Each point represents the price and quantity data for a given year. econ graph a.Explain whether simply drawing the line that approximates the data points would give the accurate demand curve for potatoes. b.In multiple regression analysis, explain why the typical hypothesis that analysts want to test is whether a particular regression coefficient (B) is equal to zero (H0: B = 0) versus whether that coefficient is not equal to zero (H1: B 0). Using the approximate data points from Part A, you may use Microsoft Excel or SPSS to assist with your answer.

Explanation / Answer

In the present dynamic environment, understanding of consumer behavior is very crucial for the success and growth of business organizations. Companies can capture good market share and generate significant revenues by understanding the customer’s response and behavior towards their products and services. Furthermore, it would also help them to get sustainable competitive advantage over their rival firms.

After segmenting the market on the basis of age group and preferences, the managers have found out that their target customers should be of age group below 60. The company can use this information to divide its market in Generation X, Generation Y, and away from the baby boomers generation.   

Using the above information about customers, the auto-car manufacturers have adopted the following strategies:

Companies like Procter & Gamble Co., Unilever PLC, and Kimberly Clark Corp. are using retina-tracking cameras to test the consumer response towards their products. This device would help to determine the product features, designs, color, and specifications that are capable of attracting the customers’ attention.

For P&G and other retailers, the retina test research helped them to introduce new designs in product packaging that attracts the customers. By screening the customers’ retina, the retail managers can place the most attracted products on the shelf. It would help to increase their sales and revenues. Hence, manager's came to know that product design plays an important role in attracting the customer.

part 2 2.

Plotting 10 years data & approximately joining them with a fitted line will not give the accurate demand curve.

The reason is that, the fitted line is only a Statistically generated straight line based on 10 years data. It does not represent the exact demand function & there is always a room for error. A regression model thus fitted is never 100% perfect.

Also, the higher the number of observations, the higher the accuracy of the regression line. In that context, only 10 years data is highly insufficient.

Finally, such a fitted regression line will most likely omit the seasonal effects on the demand, rendering the model so developed a misfit for actual demand prediction purposes.

In multiple regression analysis, if a particular regression coefficient is zero, that means that variable has no impact on the dependent variable. Therefore, the null hypothesis H0 states that the coefficient is zero, that is, the specific independent variable has no Statistical effect on the dependent variable. If the null hypothesis is rejected by the Statistical test, then the alternative hypothesis, viz. that the non-zero coefficient will Statistically affect the dependent variable, is true

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