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Essentials of Marketing 7th Edition by Charles Lamb,Joe Hair,Carl McDaniel
Edition 7ISBN: 978-0538478342Essentials of Marketing 7th Edition by Charles Lamb,Joe Hair,Carl McDaniel
Edition 7ISBN: 978-0538478342 Exercise 12
Reliance on price as a predictor of quality seems to occur for all products. Does this mean that high-priced products are superior? Well, sometimes. Price can be a good predictor of quality for some products, but for others, price is not always the best way to determine the quality of a product or service before buying it. This exercise (and worksheet) will help you examine the price-quality relationship for a simple product: canned goods.
Activities
1. Take a trip to a local supermarket where you are certain to find multiple brands of canned fruits and vegetables. Pick a single type of vegetable or fruit you like, such as cream corn or peach halves, and list five or six brands in the following worksheet.
2. Before going any further, rank the brands according to which you think is the highest quality (1) to the lowest quality (5 or 6, depending on how many brands you find). This ranking will be y.
3. Record the price and the volume of each brand. For example, if a 14-ounce can costs $.89, you would list $.89/14 oz.
4. Translate the price per volume into price per ounce. Our 14-ounce can costs $.064 per ounce.
5. Now rank the price per ounce (we'll call it x ) from the highest (1) to the lowest (5 or 6, again depending on how many brands you have).
6. We'll now begin calculating the coefficient of correlation between the price and quality rankings. The first step is to subtract x from y. Enter the result, d , in column 6.
7. Now calculate d 2 and enter the value in column 7. Write the sum of all the entries in column 7 in the final row.
8. The formula for calculating a price-quality coefficient r is as follows: In the formula, r s is the coefficient of correlation, 6 is a constant, and n is the number of items ranked.
9. What does the result of your calculation tell you about the correlation between the price and the quality of the canned vegetable or fruit you selected? Now that you know this, will it change your buying habits?
Activities
1. Take a trip to a local supermarket where you are certain to find multiple brands of canned fruits and vegetables. Pick a single type of vegetable or fruit you like, such as cream corn or peach halves, and list five or six brands in the following worksheet.
2. Before going any further, rank the brands according to which you think is the highest quality (1) to the lowest quality (5 or 6, depending on how many brands you find). This ranking will be y.
3. Record the price and the volume of each brand. For example, if a 14-ounce can costs $.89, you would list $.89/14 oz.
4. Translate the price per volume into price per ounce. Our 14-ounce can costs $.064 per ounce.
5. Now rank the price per ounce (we'll call it x ) from the highest (1) to the lowest (5 or 6, again depending on how many brands you have).
6. We'll now begin calculating the coefficient of correlation between the price and quality rankings. The first step is to subtract x from y. Enter the result, d , in column 6.
7. Now calculate d 2 and enter the value in column 7. Write the sum of all the entries in column 7 in the final row.
8. The formula for calculating a price-quality coefficient r is as follows: In the formula, r s is the coefficient of correlation, 6 is a constant, and n is the number of items ranked.
9. What does the result of your calculation tell you about the correlation between the price and the quality of the canned vegetable or fruit you selected? Now that you know this, will it change your buying habits?
Explanation
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Price - quality correlation:
Collect th...
Essentials of Marketing 7th Edition by Charles Lamb,Joe Hair,Carl McDaniel
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