lecture10forecast

The Candy Study: The effect of current emotions on predicted preferences : 

The Candy Study: The effect of current emotions on predicted preferences "Eat" Group Open Bag Answer Questions "Wait" Group Answer Questions Open Bag

Imagine that you have been set up on a date with someone who you consider to be very attractive. You can meet this person either for lunch this coming Friday, or for dinner and a movie on Friday evening a week later. Which would youprefer?: 

Imagine that you have been set up on a date with someone who you consider to be very attractive. You can meet this person either for lunch this coming Friday, or for dinner and a movie on Friday evening a week later. Which would you prefer? % preferring the quick lunch

Suppose that you have completed some consulting work and were told that you would receive “about $3000” and that you would be paid “sometime in November.” You get a phone call this week, and the manager of the company informs you that you will receive $3800 onFebruary 5th. All things considered, do you regard thisas good news or bad news? : 

Suppose that you have completed some consulting work and were told that you would receive “about $3000” and that you would be paid “sometime in November.” You get a phone call this week, and the manager of the company informs you that you will receive $3800 on February 5th. All things considered, do you regard this as good news or bad news? "bad news"

Suppose you were involved in plane crash and were stuck in remote mountains for a week with other survivors who you did not previously know. You are uncertain when or if you will be rescued. What is the likelihood that you would steal food from the other survivors? : 

Suppose you were involved in plane crash and were stuck in remote mountains for a week with other survivors who you did not previously know. You are uncertain when or if you will be rescued. What is the likelihood that you would steal food from the other survivors? 0——1——2——3——4——5——6——7——8——9——10 Definitely would not Definitely would Likelihood of stealing food

Slide5: 

Suppose that in exchange for completing a 45 minute survey for Amazon.com, you could receive your choice of one the four books listed below. If you choose to complete and return the mail survey, the book will be shipped to you within 2 weeks of the time that Amazon receives your survey. What is the most you would be willing to pay for overnight delivery, rather than waiting 4 weeks? Willingness to pay for overnight delivery

Likert Scale : 

Likert Scale I wish there were more “case study” lectures and fewer ”concepts” lectures. [0.0] Strongly Neither agree Strongly Disagree Disagree nor disagree Agree Agree Professer Frederick talks too slowly [-1.24 ] Strongly Neither agree Strongly Disagree Disagree nor disagree Agree Agree Professer Frederick talks too quietly [-1.24 ] Strongly Neither agree Strongly Disagree Disagree nor disagree Agree Agree

I do not get to participate as much as I would like to. [-0.17] : 

I do not get to participate as much as I would like to. [-0.17] Likert Scale Strongly Neither agree Strongly Disagree Disagree nor disagree Agree Agree There is too much reading for this course. [-0.29] Strongly Neither agree Strongly Disagree Disagree nor disagree Agree Agree Professor Frederick does not allow enough class discussion. [-1.14] Strongly Neither agree Strongly Disagree Disagree nor disagree Agree Agree

I wish there were more “case study” lectures and fewer “concepts” lectures. [-0.3] : 

I wish there were more “case study” lectures and fewer “concepts” lectures. [-0.3] Likert Scale Strongly Neither agree Strongly Disagree Disagree nor disagree Agree Agree Strongly Neither agree Strongly Disagree Disagree nor disagree Agree Agree Strongly Neither agree Strongly Disagree Disagree nor disagree Agree Agree Professer Frederick talks too slowly [-1.25 ] Professer Frederick talks too quietly [-0.2 ]

I do not get to participate as much as I would like to. [-0.5] : 

I do not get to participate as much as I would like to. [-0.5] Likert Scale Strongly Neither agree Strongly Disagree Disagree nor disagree Agree Agree There is too much reading for this course. [-0.3] Strongly Neither agree Strongly Disagree Disagree nor disagree Agree Agree Professor Frederick does not allow enough class discussion. [-0.8] Strongly Neither agree Strongly Disagree Disagree nor disagree Agree Agree

Semantic Differential 2002 812 : 

Semantic Differential 2002 812 For each line below, think about 15.812, and then place an “ X” somewhere between the two adjectives.

Semantic Differential 2002 814 : 

Semantic Differential 2002 814 For each line below, think about 15.812, and then place an ”X” somewhere between the two adjectives.

Mean Rank : 

Mean Rank

Top 10 things you dislike about this class : 

Top 10 things you dislike about this class Sloan Space not updated on a regular basis "Technical difficulties" Fast speech by Prof. Frederick Various topics not covered in sufficient depth Lack of quantitative work I don’t know who I am working with for the final project – too disorganized. I don’t really like group projects Bringing the name board is a pain Would like to learn more about the psychology involved behind market decisions

Top 10 things you dislike about this class : 

Top 10 things you dislike about this class TA should pick better candy with the class' money Course reader is too expensive The class is at lunch time It’s really far away from the class I have right before it. The class before this one leaves this room stuffy. Chairs are too close together, I bump my knees getting in and out. Jalapeno jellybeans!

Worst Lecture : 

Worst Lecture

Best Lecture : 

Best Lecture

things you dislike about this class : 

things you dislike about this class TA should pick better candy with the class' money Course reader is too expensive The class is at lunch time It’s really far away from the class I have right before it. The class before this one leaves this room stuffy. Chairs are too close together, I bump my knees getting in and out.

Top 3 things you dislike about this class: 

Top 3 things you dislike about this class More discussion of High tech products! No overviews & takeaways! Professor speaks too quickly!

Outline of today's lecture : 

Outline of today's lecture • Market Size vs. Market Share • Estimate total annual demand for plastic diapers • "Hierarchy of Effects" model • 3 methods for forecasting demand – historical trends – surveys – test markets

Market size vs.Market share : 

Market size vs.Market share substitutes for your product

Proton-Pump Inhibitors : 

Proton-Pump Inhibitors 1997 2002

Promoting Primary Demand (market size) or Selective Demand (market share) : 

Promoting Primary Demand (market size) or Selective Demand (market share) • in 1907, an advertising executive for Campbell's Pork and Beans found that 94% of housewives cooked their own beans from scratch. • Campbell's had 36% market share. 7 competitors collectively had 64% market share. • In blind taste test, Campbell's got the highest ratings of all the brands • Should Campbells run an ad that focuses on the time saving of using canned beans, or should it focus on the fact that it has a better product than its competitors?

Demand = f (x,y,z,…): 

Demand = f (x,y,z,…)

Different levels of demand forecasts : 

Different levels of demand forecasts

What is the potential annual demand for plastic diapers? : 

What is the potential annual demand for plastic diapers? • 4 million babies delivered each year in U.S. • Babies defecate about 10 times per day at birth • Children defecate about 4 times per day at age 3 • Few kids are toilet trained before age 2 • But almost all are toilet trained by age 3

Computing total diaper demand : 

Computing total diaper demand

Hierarchy-of-Effects Model : 

Hierarchy-of-Effects Model UNAWARE AWARE TRIAL REPEAT

3 bases of demand forecasts: : 

3 bases of demand forecasts: • What people have done – extrapolation (time series analysis) – statistical demand analysis • What people say they will do – surveys • What people actually do – laboratory markets – test markets

Trend Analysis : 

Trend Analysis

Statistical Demand Analysis : 

Statistical Demand Analysis # cans of soda = -140 + 6X – .002Y

What people say they will do : 

What people say they will do ____ I definitely would not buy ____ I might buy ____ I definitely would buy

Simulated markets : 

Simulated markets Laboratory market: • respondents given $20 • complete initial survey (perceptions & preference) • shown advertising for competing brands & new brand • enter simulated retail store with, say, deodorants • spend any amount of money from $0 to $20 • samples given to those who do not buy new product • "purchasers" vs. "free samples" recorded • follow-up telephone interview

Test markets : 

Test markets Actual test market: • Product is actually "launched" in a limited way • What types of cities are chosen? • What is the benefit of a test market? • For what types of goods are test markets not feasible? • What are drawbacks to test marketing?

Key Points or "Take Aways" : 

Key Points or "Take Aways" • Company can grow by expanding market size or stealing market share • Size of the potential market depends on how broadly one thinks about the product (Are coffee and beer substitutes?) • Often useful to decompose forecasts – unaware → aware – aware → trial – trial → repurchase • 3 methods of demand forecasts – historical trends (dangers of extrapolation) – surveys (dangers of trusting reports; answers "labile") – test markets (dangers of competitors fiddling & stealing)

Semantic Differential 2001 : 

Semantic Differential 2001 For each line below, think about 15.812, and then place an ”X” somewhere between the two adjectives. * x Quantitative _____ _____ _____ _____ _____ _____ _____ Quantitative x * Breadth _____ _____ _____ _____ _____ _____ _____ Depth x * Practical _____ _____ _____ _____ _____ _____ _____ Theoretical x * Structured _____ _____ _____ _____ _____ _____ _____ Free - Form

Rating Scale : 

Rating Scale

The First Home Video System : 

The First Home Video System All for a modest $30,000! Installation included a "free" visit by an Ampex service engineer to set up the 900 lb system. Ampex VR-1500 in the 1963Neiman - Marcus Christmas catalog