Essay Sample on Business Drivers and Improving Business Forecasts

Introduction

New retail organizations find it difficult to predict the customer perceptions on their brand because of their complexity and various other factors manifested by the business organization. Therefore, there is the need for a special technique to facilitate that process, for instance, the use of multivariate analysis. The multivariate analysis uses various statistical tools such as conjoint analysis, regression analysis, and cluster analysis to establish the relationship existing between the multiple factors in the business environment. Determination of these factors enables the business organization to tell customer perceptions of their product offerings. Moreover, the responses by the customers are usually grouped as interdependent, dependent, and independent. A single or many external factors influence dependent customer responses. Independent customer responses are customer-specific, for instance, age or gender. Therefore, multivariate analysis is focused on interdependent relationships which are not under the control of a particular identified factor of various factors grouped.

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In the following discussion, I am assuming the position of a Business Analyst to a new retailer looking to expand their product offerings. The success of the retail business organization is dependent upon proper decision making, as a result of the evaluation of business environment statistics. A single variable does not control the retail organization, hence the need for multivariate analysis. Moreover, I am going to provide ways in which multivariate statistics will be used in decision making about expansion prospects by the new retailer. An example of how a real company has used various multivariate techniques will also be discussed. In conclusion, a summary of the significance of multivariate analysis will be written to the upper management.

The Use of Multivariate Statistics

The new retail business organization is affected by various variables which include brand name, price, and the quality of the outdoor sporting goods. There are other factors equally significant but may be overlooked, such a proper relationship between the administration and the staff members, the atmosphere in the store, location, and closeness to other retail business organizations. Through multivariate analysis, the board of directors can identify and evaluate the best possible alternative to improve positive consumer perception towards the organization; hence an increase in sales as a result of the boosted traffic of consumers into the retail organization (Farrell, 2008). Therefore, the three major ways in which multivariate statistics can be used in the retail organization include Advertising, Store layout, and product pricing.

Advertising

Multivariate advertising is used by marketers to identify and evaluate the best possible technique to advertise a product to consumers. The advertising usually based on diverse characteristics of the consumers, for instance, income and age. Multivariate advertising is a sophisticated technique which uses a wide array of stands and tests in stark opposition, to simpler methods such as Taguchi when evaluating the marketing campaigns. During the multivariate testing, marketers employ the technique to establish various advertisements and carry out tests on them. That is with regards to multiple variables, for instance, consumer income, age, background, gender, interests, and industry among others. The tests undertaken are used in the identification and evaluation of the best possible advertising technique to be conducted for a particular product. The method of advertising is based upon means by which marketers collect consumer data for analysis. These advertising methods include multiple regression scaling, discriminant analysis, logistic regression analysis, factor analysis, multidimensional scaling, cluster analysis, structure equation modeling, canonical variation, conjoint analysis, and correspondence analysis. The marketing campaign culminates in the collection of data in a particular manner, hence leading to the multivariate advertising technique used. Therefore, the new retailer may use regression analysis, whereby one dependent variable is maintained in addition to various independent variables. For instance, the amount of sporting gear bought in each week can be considered a dependent variable, whereas the gender and age of the consumers as the independent variables. After that, there is a search for the best possible advertising method from the data obtained.

The data collected is analyzed following conversion into numbers and creation of charts. From the charts, linearity will indicate a stable trend connecting a series of variables to a dependent value. From the straight line, the retailer can then understand consumer perceptions, consequently, be able to develop an advertisement which is custom made to a particular base of customers. The method will enable the new retailer to increase sales as the consumers are convinced to buy sporting goods. The technique for multivariate advertising works exceptionally well for the business organization running an online platform. That is because, through the internet, the retail business organization can access the location of various customers by placement of ads on multiple sites they access. Moreover, the computerized programs take data from the website advertisements directly and analyze by using multivariate methods. That produces complex and enormous data sets, in addition to providing in-depth analysis.

Store Layout

The development of an ambient retail store is essential to determine the real atmosphere of the retail business organization. The store layout is a crucial element influencing the customer's perception towards the business organization. The new retail business organization needs to create a modern aesthetic ambiance of their physical store, as stylish shoppers attitudes are impacted by what they see. The creation of the store atmosphere is dependent on the layout and design works during construction. The pleasantness of both the external and internal environment of the retail store, for instance, furniture well placed, goodwill atmosphere, ample space for movement, and among other special layouts prove important to enhance customer attitudes towards the retail store (Vijayabanu & Rengarajan4, 2018).

From the exterior variables, the external environment pleasantness ranks first in the development of positive customer attitudes towards the retail organization. Whereas, with regards to the internal variables the aeration of the room is a crucial element preferred by the customers. The customers prefer well-placed furniture to complement the design and layout of the store. Based on the human variable, the customers usually prefer an ambiance which is not congested by both employees and customers. According to the International Journal of Pure and Applied Mathematics, whereby exterior variables are influencing (R2=91.6%), the design variables and store layout contribute to 65 percent. Whereas, decorations and point of purchase variables affect 30.9 percent towards customer perception of purchasing (Vijayabanu & Rengarajan4, 2018).

Product Pricing

Consumers have been identified to have several responses about how goods are priced, hence influencing their purchasing power. Presenting the price information to the customers has been a critical issue, having significant implication for regulatory and managerial decision making. The problems of product pricing have been viewed from the perspective of S-O-R, whereby, stimulus variables (S) are the perceptions presented for the customer, orgasmic variables (O) are those factors personal to an individual influencing their processing, derivation, and acquisition from the stimulus variables. The orgasmic variables include factors such as attitudes, price awareness, and among other subjective standards. Responses by the customers are based on the interaction of orgasmic conditions and acquired stimuli, leading to the generation of customer perception. Therefore, the new retail business organization, need to take into perspective the various factors of S-O-R to improve their sales. In instances where there is a correlation of multiple response measures, independent univariate analysis of variance runs on either dependent variate, leading to incomplete conclusions (Sharma, 2008). That case requires the use of multivariate analysis of variance for examination of product pricing.

The presentation of product pricing is considered to be the S-variable influencing the customer's perception towards the outdoor sporting goods. But the experiences of the customer and the context upon which the product pricing was made also affect the customer's perception of the business organization. The O-variable is considered to be the prices offered by the similar business organization and the cumulative customer experiences on the product, which influence the price perceptions. Therefore, the product pricing experience by the customer forms a quantifiable and specific standard of reference for the determination of preceding product prices. Additional sets of specific contextual cues influence customer perception on pricing and are categorized into semantic and comparison. Comparison cues are based on the references of the advertiser to provide a basis of determining the price offered. Examples of comparison cues include current market price, retail price as suggested by the manufacturer, or the regular selling price by the retailer. Semantic cues are based on phrases descriptive of the price, for instance, very low, super savings, or significantly reduced. The new retailer will be able to delve into the customer's emotions, hence influencing their positive perceptions on the sporting goods provided. The new retail business organization, moreover, should consider the validity of product pricing formats to control the customers' purchasing power. For instance, through the presentation of the product pricing in a favorable manner without misleading potential customers.

Use of Various Multivariate Techniques in a Real Company

Factor Analysis

Marketing factor analysis entails changing a particular marketing variable and identifying any possible effects of the change. The continuity of the company is dependent on the sales made; hence proper factor analysis helps in the identification and evaluation of the potential marketing efforts to pursue. Factor analysis is based on the determination of the effect of the change in one marketing point, to the overall sales. The Coca Cola Company has effectively used factor analysis through the innovations undertaken in packing and tastes of their beverages. From the introduction of new packaging techniques, the revenues are expected to increase to $150 billion by the year 2020 (Kanesan & Krishnan, 2018). Moreover, the tastes of beverages have been declining throughout the world providing a better opportunity for Coca Cola.

Multidimensional Scaling

Multidimensional Scaling is a marketing procedure for the representation of perceptions and the respondent's preferences by the technique of visual display. Geometric relationships usually represent the perceived psychological relationships, in the multidimensional space (Kanesan & Krishnan, 2018). The use of multidimensional scaling in the business organization includes determination of the nature and number of dimensions of consumer perception on brands, positioning brands on the dimensions, and position identification of the ideal brand of the consumer. The Coca Cola Company has used multidimensional scaling in the identification of distribution channel decisions. That is by analysis of the multifaceted map leading to the creation of...