Demand and Supply Analysis - Assignment Example

Introduction. Entering into a new venture requires critical analysis especially to identify factors which determines the business success. Factors like identification of product elements, price, location to locate the business as well as the method of promoting the business becomes very crucial especially in identifying the potential customers the business should expect after the actual business begins. Business research and planning helps business owners in identifying what they are required to do in new venture and come up with the best solution possible of the identified problems and risks. Demand and supply analysis will be very necessary for buyers and sellers especially when making business plan in determine the quantity supplied in the market and quantity demanded in the market. It could be unrealistic for one to start a venture in a saturated area where suppliers are more than demand. Beri (2008) puts forward that marketing research is very crucial in to identify potential customers’ interest to new venture products. He also puts forward that large population doesn’t guarantee business success though demand is estimated to be positively related to population. Wrenn, Stevens and Loudon (2008) believe that population doesn’t determine business success but the number of potential and esteemed customers. It is very crucial for business owners to conduct a research to identify whether there is enough market for the intended product, determine the best method to promote the product, and determine the best product design depending on customer’s preference. On the other hand there is need to analyse and identify the prevailing price in the market as a guideline for pricing the products. This is very necessary as failure to that one may end up pricing commodities at a very high price leading to business failure. \ Marketing research on the other hand helps in locating the best place to locate the business, identify the best segments to capture by researching on potential customers annual income, their expenditure in a restaurant, the prices they are willing to pay for a single meal, and what customers prefer and perceive different products sold in the restaurant. This will actually be as a way of enhancing business success. Analysis methods and techniques. The data will be analysed through univariate, bivariate and multivariate techniques. Univariate technique will be employed in analysing a single variable, bivariate on the other hand will be used in analysing two variables while multivariate analysis will be used bin analysing more than two variables. The techniques will be employed in identifying the variables relationship, linear regression, independent tests and also analysis of variance. Techniques assumptions. Student t- test. In using the independent t-test there will be an assumption of independence, equality of variance, and variables normality (Pallant, 2007).. Analysis of variance. In analysis of variance there will be assumptions of variables normality, and equality of variance. Unequal population means and all variables which are dependent should be continuous (Coakes, Steed & Prince, 2008). Regression and correlation techniques. There will be an assumption that the variables are independent while one of them is a dependent variable and assumption of equality of variance. Statistical analysis and results. 1. Is the average amount that people are willing to pay for a meal less than the forecast value of $19? H0: µ< $19 HA: µ>$19 The test statistics to be employed is one sample T-test at 5% significant level with the assumption that the variable is normally distributed. Assumption testing. Given that the P value of 0.072 is greater than 0.05 it is concluded that the data is normally distributed. Hence the assumption is fulfilled. Hypothesis testing. At 0.05 level of significant t(399)=0.609, P=0.543 at 2-tailed test. At one tailed test p = 0.2715. hence the P>0.05 hence we accept the null hypothesis that the average price that people are willing to pay is less that the forecated amount of $19. 2. Does the average income of the people surveyed differ from $70,000? Let µ denote the average income of people surveyed. H0: µ= $70000 HA: µ≠ $70000 The test statistics to be used is one sample T-test on assumption that the variable is normally distributed. Assumption testing. Given that the p-value is 0.200* which is greater than 0.05 significant level is a clear indication that the income variable is normally distributed. Testing hypothesis. With t(399)= 4.905, p Read More