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Market research is often concerned with how consumers adjust their expenditure on various commodities as their level of income increases. In this example we focus on households that consist of two adults and no children, and we examine how a change in income changes expenditure on food and transportation. Observations on weekly expenditure for these two commodities, as well as weekly income (x), number of children (k) and number of adults (a), for 1000 households, appear in the file hhsurvey.xls Questions appear in the ms word document file.

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(a) From the sample of 1000 households, how many households have 2 adults and no children.
By EXCEL filtering, we find that 312 households have 2 adults and no children.

(b) Let y1 = weekly expenditure on food, y2 = weekly expenditure on transport. For the subsample of households in part (a), estimate the following two expenditure functions
y1t = β1 + β2ln(xt) + e1t

y2t = α1 + α2ln(xt) + e2t

Report the estimated coefficients, their standard errors, and the R2 for each equation. Briefly and clearly comment on the results (Each point you make in your comment state it clearly as, ...

Solution Summary

Market research is examined. Household expenditure functions are examined.

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Marketing Research

Task -

7-10 slides with notes

Objective -

Use effective communication techniques.
Discuss the marketing research process, including problem definition, research design, data collection, data analysis and the use of the results.
Define different types of data.

Details: You are beginning to understand the market for high-end coffee brewers but to provide complete answers to your many questions, you believe you will need to perform some additional marketing research. JavaJoy has never had a formal marketing research process. Strategic and tactical decisions have typically been made based on management's personal experiences and views of the market. You think you detect a bit of "group think" among Hank and his senior management staff and you know you will need to do some educating to gain full support for your approach.

You decided to hold a meeting to explain the marketing process to Hank and his team. In order to explain this in a way Hank and his team will understand, you will create a PowerPoint presentation with detailed notes. Your PowerPoint presentation should define the problem, the data needed, data collection methods and how the data will be analyzed.


JavaJoy, Inc. was founded by Hank Sanchez in 1980. His vision was to elevate coffee to the epicurean level of fine wine. Hank's family had been in the coffee bean brokerage business for generations but he knew that even the finest and most carefully roasted coffee beans required an excellent brewing system to achieve a beverage with optimal flavor and aroma. He started JavaJoy to develop, manufacture and distribute high-end coffee brewing systems that would meet his exacting requirements.

JavaJoy has two primary sales channels. They market directly to the medium and large restaurant chains that maintain technical staffs who specify equipment like brewers. Sales to smaller chains, independent restaurants and institutions are generally made through a network of kitchen equipment suppliers (KES) that tend to be regional in focus. The JavaJoy product line is very well known and highly respected in the industry but, due to its high price, Hank had only enjoyed limited success until the market for gourmet coffee drinks exploded in the 1990's. With this new market growth, Hank wants to recast his 5-year strategy to take advantage of the expanding market.

You have been hired as JavaJoy's first Marketing Manager. You have questions about current market size, growth potential, buying habits, distribution channels, and competition, just to name a few. But you quickly realize that much of the existing market knowledge within JavaJoy is based on management experience and perception, which does not necessarily reflect the current reality of the booming market. You need to quickly sort out fact from opinion, determine how to clearly define the market(s) for beverage brewing equipment, and determine where these markets are heading so you can supply Hank with the information he needs to generate his revised strategy.

It's clear that Hank wants the company to grow, but how can this be accomplished? What are the possible alternative approaches, and which is best? What growth can be anticipated? What are the threats to growth? Remember that the ultimate decisions concerning how to grow constitute strategic planning. Your job at this point is to provide accurate and timely information to support that strategic planning process. To provide the answers you have to begin asking questions, gathering data, and developing information.

I need help getting started. Thank you.

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