What Affect Do Law of Numbers Have on Consumers?
What affect do Law of Numbers have on Consumers?
We have previously established what the Law of Large Numbers is, and how it affects economics. This section will explain the impact it has on the consumer. When we look at consumers, they are the lifeblood of any business. Without the consumer, a business cannot survive. Businesses have to continue to produce goods and services that consumers are willing to pay for. Businesses have to continue to generate more revenue year after year to ensure growth, but how does this happen if at some point the Law of Large numbers says that no matter what the consumer behavior becomes the norm, and growth stops?
Slide
Companies have to understand that there has to be energy and effort focused on strategy, priorities, understanding customer’s needs, attention to detail, and marketing. They have to understand the different types of customers which are; loyal customers, discount customers, impulse customers, need-based customers, wandering customers, as well as customers that are the target customers whom they should market to. When consumers are purchasing products companies start to see that what was once an outlier, now becomes part of the collective norm. The main factor on how the Law of Numbers impacts customers is when that outlier becomes the norm.
Slide
In the marketplace what this means for consumers is if companies are continuously trying to increase revenue at a high percentage in comparison from the year before, they must continue to innovate and develop new products to maintain brand loyalty. One of the examples we used earlier is Apple and through present day, they continue to defy the odds and have remarkable gains. This is completely against the norm. They have continued to innovate and upgrade their product, to maintain consumer loyalty. An example is that since 2003 Apple has maintained 20% or more growth rates every single quarter except for one, and in 2011 their least profitable quarter was greatest profitable quarter in 2009. This type of growth shows that they have not out grown the specific economy they operate in yet, which I believe in the technology field. On the other hand, there have been lots of companies that are established, but wanted to develop additional product lines to continue that growth, that just did not go over well with consumers. Examples of these would be Life Savers soda, McDonald’s Arch Deluxe, Crystal Clear Pepsi, New Coke, Quickster. These are products from established