Basic Marketing: A Global Managerial Approach

Perreault−McCarthy: Basic
Marketing: A
Global−Managerial
Approach, 14/e

8. Improving Decisions
   with Marketing
   Information

Text © The McGraw−Hill

Companies, 2002

Computer-Aided Problem

8 .Marketing Research

Te xmac, Inc., has an idea for a new type of weaving

machine that could replace the machines now used by

many textile manufacturers. Te xmac has done a tele-

phone survey to estimate how many of the old-style

machines are now in use. Respondents using the present

machines were also asked if they would buy the im-

proved machine at a price of $10,000.

Te xmac researchers identified a population of about

5,000 textile factories as potential customers. A sample

of these were surveyed, and Texmac received 500 re-

sponses. Researchers think the total potential market is

about 10 times larger than the sample of respondents.

Two hundred twenty of the respondents indicated that

their firms used old machines like the one the new ma-

chine was intended to replace. Forty percent of those

firms said that they would be interested in buying the

new Texmac machine.

Te xmac thinks the sample respondents are representa-

tive of the total population, but the marketing manager

realizes that estimates based on a sample may not be ex-

act when applied to the whole population. He wants to

see how sampling error would affect profit estimates. Data

for this problem appears in the spreadsheet. Quantity es-

timates for the whole market are computed from the

sample estimates. These quantity estimates are used in

computing likely sales, costs, and profit contribution.

a. An article in a trade magazine reports that there are

about 5,200 textile factories that use the old-style

machine. If the total market is really 5,200

customers—not 5,000 as Texmac originally

thought—how does that affect the total quantity esti-

mate and profit contribution?

b. Some of the people who responded to the survey didn’t

know much about different types of machines. If the

actual number of old machines in the market is really

200 per 500 firms—not 220 as estimated from sur-

vey responses—how much would this affect the

expected profit contribution (for 5,200 factories)?

c. The marketing manager knows that the percentage of

textile factories that would actually buy the new

machine might be different from the 40 percent who

said they would in the survey. He estimates that the

proportion that will replace the old machine might be

as low as 36 and as high as 44 percent—depending

on business conditions. Use the analysis feature to

prepare a table that shows how expected quantity and

profit contribution change when the sample percent

varies between a minimum of 36 and a maximum of

44 percent. What does this analysis suggest about the

use of estimates from marketing research samples?

(Note: Use 5,200 for the number of potential cus-

tomers and use 220 as the estimate of the number of

old machines in the sample.)

For additional questions related to this problem, see

Exercise 8-3 in the Learning Aid for Use with Basic Mar-

keting,14th edition.

Improving Decisions with Marketing Information 245