For firms to make money from a product, they must be aware of who they are selling it to. No matter how high quality or innovative a product is, if it is sold to the wrong market, a loss is likely to be incurred. Consumer research guides firms to the individuals or groups of individuals who need a product and thus enhance product and service customization to suit the needs and wants of this specific group. Therefore, the importance of market research is that it focuses on production and marketing on potential customers, thus increasing profitability.
Question 1 (a)
Consumer research in the auto industry has shown that the consumer power that was initially held by the baby boomers has reduced considerably. This realization has led auto industry executives to rethink their pricing and design and also shift their attention to Generations X and Y. These executives are using the information on the change in demand to produce cars that are more suited for younger customers. For example, brands are producing budget-priced cars with modern multimedia systems and music streaming options such as the Chevrolet Sonic (White, 2013). Brands are also utilizing the information to evaluate their marketing strategies, car features such as dashboard entertainment, and factors such as horsepower and mileage. The task at hand is for brands to convince Gen X and Y that their cars are affordable and cool. Therefore, the information has enabled brands to identify the major customer segment and thus change production and marketing to address this segment.
Procter & Gamble, Kimberly Clark Corp, and Unilever PLC are utilizing technological information and innovations to understand their market segment better (Glazer, 2012). The companies are using new technology to understand what attracts customers more since the information obtained from customers on what they want has been proven to be unreliable. As these companies track eye movement of shoppers as they look on the shelf, they get a better understanding of the designs that attract customers the most. This information is essential to these firms as they can produce eye-catching details on product packages to increase profitability and increase the chances of customers picking their products.
Question 2 (a)
Drawing the line that approximates the data points, also known as the Line of Best Fit does not give the accurate demand curve. From the graph, similar quantities of potatoes retail at different prices, which cause variation in the data points. This variation affects the accuracy of the line of best fit (Farnham, 2014). The line of best fit only attempts to establish a linear relationship between the variables. To increase the accuracy of the demand curve, there is a need to calculate and graph a regression line using software such as Excel. This way, the slope, intercept, and regression coefficient is obtained. Using the regression coefficient, one can determine the linearity of the points. A perfect correlation results in a regression coefficient (R) of 1.000.
In multiple regression analysis, the typical hypothesis that analysts use is H0: B=0 versus H1: B0. This hypothesis is used to test the ratio of the estimated coefficient to its standard error (Farnham, 2014). By doing this, the statistical significance of the factor is obtained. The test is used to evaluate whether a coefficient is different from zero. This is used to determine whether the factor would have a statistically significant change in subsequent regressions. This hypothesis is the most commonly used because most economic analyses involve deciding on whether to accept or reject certain restrictions based on whether or not they are satisfied by the model under consideration. The simple hypothesis is preferred because most regression analyses deal with two variables.
Farnham, P. G., (2014). Economics for managers. Pearson.
Glazer, E. (2012). The Eyes Have It: Marketers Now Track Shoppers' Retinas. Retrieved from https://www.wsj.com/articles/SB10001424052702303644004577520760230459438
White, J. B. (2013). Auto Makers Look past Baby Boomers (A Rethinking of Design and Pricing to Win Over 20-to-40-Year-Old Customers). Retrieved from https://www.wsj.com/articles/SB10001424127887323468604578245743091327424
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