Comparing Empiricl Consumer Demand Studies
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Comparing Empirical Consumer Demand Studies
Consumer Market Data
MBA5160XA
Managerial Economics
Renee Hopfer
April 28, 2012
Studying supply and demand for consumer behavior always includes statistical data from surveys and research to determine what preferences the buying public has recently purchased and applying the information to shape what companies will continue to offer in the future. But are statistics enough? Uncovering what limits in relationships to quality and price a consumer is willing to respond to adds a new dimension to the process of determining what directions a company will take in the market.
An analysis study conducted by the King Saud University and written by Muhannad Abdallat, Ph.D., outlines very clearly what processes consumers go through and what decisions they make with their available resources when making purchases. The study focused on tourism and listed the steps that consumers go through to make decisions on what hotels and vacations to spend their money on. The study came to the conclusion that not all consumers go through all the steps every time depending on the types of purchases.
Some of the important steps that were considered are; how consumers feel, think and reason to make selections when alternatives were offered. How the consumer is influenced by their environment. How consumers behave while choosing. What the limitations consumers may have as to time, resources and what choices are available to them. Taking into considerations how important the choice is for the consumer and what need it may satisfy. After all the factors have been examined companies can adapt and improve their marketing strategies to reach a wider consumer base or the consumer that is targeted for their market.
Empirical Consumer Demand
Empirical consumer demand looks at the relationship the market has in regards to price, quality and features presented to estimate what consumers would pay for hotel rooms in different market situations. Establishing a model of price, quantity, quality along with availability helps to determine a constant for choosing a hotel room by consumers. Developing this structural estimation with limits as to how much can be charged for the given product produces a level of concentration in price range that a customer is willing to pay for the product or service. Presenting the same scenario with different price labels establishes the limit as to what customers are willing to pay for hotel rooms
Consumer Market Data
Companies have been using consumer data for decades. Collecting and analyzing what and how consumers have been purchasing since the first general store opened in a new country called America. We must keep in mind that of course all businesses and companies want to know what is popular and what needs to be eliminated from their lineup but there are still companies in the world that have been producing products unique to their brand and will always continue that line as they have become a standard or representation of the best the world has to offer. A great example of a product a customer would purchase in the world of competitive show horses especially hunter/jumpers would be Hermes saddles, when price is no object and you want the very best. The consumer decision in this case was determined based on wanting only the best no matter what the cost may be. By this product you are showing your peers that you “know” what to buy and can afford it.
Companies develop entire departments focused on market research and use the collected data to develop market strategy. The two go hand in hand; skipping either concept might cause companies to miss important details and data needed to form a good strategy. Conducting the research by determining what sector the data