Home Assignment

Roll No.:
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Question 1: The Federal Reserve (the Fed) controls currency in the U.S. Recently, the Fed has
been considering some changes in the currency design. One change involves paper money,
which is currently all the same size and shape (no matter what's the bill denomination). Some
members of the Fed believe that money would be easier to use if it came in different colors, e.g.,
$1 on green paper, $5 on blue paper, $10 on red, etc. In addition to color, the Fed is considering
changing the size of the bills, so that the five-dollar bill would be larger than the one, the ten
would be larger than the five and so on.

Before making these changes, the Fed believes that it might be useful to conduct some
marketing research. Thus, La Jolla Marketing Research Inc. (LJMR) is contacted by the Fed and
asked to collect some information to help forecast whether these changes will be successful and
popular with customers. What research should La Jolla Marketing Research propose? Be specific
when describing alternative research designs.

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Question 2: Peppy Pet Company, a large manufacturer of pet food products, conducted a study in
2001 in order to assess how its brand of dog food was faring in the market. Questionnaires were
mailed to a panel of 1,260 families with a dog. The Peppy Pet brand had three major
competitors: Brand A, Brand B, and Brand C. A similar study conducted in 2000 had indicated
the following market shares: Peppy pet, 31.75% (400 families); Brand A, 25% (315 families);
Brand B, 32.54% (410 families); and Brand C, 10.71% (135 families). The present study
indicated that Peppy Pet’s market share had not changed during the one-year period. However,
Brand B increased its market share to 36.5% (460 families). This increase could be accounted for
by a decrease in Brand A’s and Brand C’s market shares (Brand A now had a share of 22.23%,
or 280 families; Brand C now had a share of 9.52%, or 120 families). The management of the
Peppy Pet Company decided it had little to worry about.

The 2001 study also revealed some additional facts. Over the one-year period, 70 families from
Brand A and 30 families from Brand C had switched to Peppy Pet. Five families from Brand B
and 30 families from Brand C had switched to Brand A, while none of the Peppy Pet users had
switched to Brand A. These facts further reassured management. Finally, 45 families switched
from Brand B to Brand C, but none of the families using Peppy Pet or Brand A had switched to
Brand C. Brand C’s loyalty was estimated to be .556.

a. Do you think that the management of the Peppy Pet Company was accurate in its analysis
of the situation? Justify your answer.
b. You are called upon to do some analysis. From the preceding data, construct the brand-
switching matrix.
c. Indicate what this matrix reveals for each of the brands over the one-year period.
d. Complete the following table and compute brand loyalties.
e. What can be said about the degree of brand loyalty for each of the four products?

At Time t 2
Bought Bought Bought Bought
Peppy pet A B C Total

Bought
Peppy Pet
At
Bought A
Time
Bought B
t1

Bought C

Total

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Question 3: Gettings & Gettings, a father-and-son insurance agency in Lafayette, Indiana, was
concerned with improving its service. In particular, the firm wanted to assess whether customers
were dissatisfied with current service and, if so, the nature of this dissatisfaction. What research
design would you recommend? Justify your choice.

Question 4: Airways Luggage is a producer of lightweight cloth-covered luggage. The company

distributes its luggage through major department stores, mail-order houses, clothing retailers, and
other retail outlets, such as stationery stores and leather-good stores. The company advertises
rather heavily, and supplements this promotional effort with a large field staff of sales reps,
numbering around 400. Sales rep turnover is high (10-20% per year). Because the cost of
training a new person is estimated at $5,000 to $10,000, not including lost sales that might result
because of a personnel switch, Ms. Brooks has been conducting exit interviews with each
departing sales rep. On the basis of these interviews, she has formed the opinion that the major
reason is dissatisfaction with promotional opportunities and pay. But top management has not
been sympathetic to Ms. Brook's pleas regarding the changes needed in these areas of corporate
policy, saying her suggestions are based on intuition and little hard data. Ms. Brooks has decided
to call on their in-house Marketing Research Department.
a. Identify the general hypothesis that would guide your research efforts.
b. What type of research design would you recommend to Ms. Brooks? Why?