Coupon Effects On Consumption Of Orange Juice
1. PROJECT OBJECTIVE
Understanding the Concept of Demand Estimation – Requirement, Process and Application in real world through chosen Case-study.
2. PROJECT LEARNINGS
Requirement for Demand Estimation:
In real world, one might need to predict the demand of the market and crucial factors influencing it as to better understand the market and play on the factors to reap benefits or spot problems. Strategies can be made to earn a competitive edge or for policy changes.
Here, demand estimation was used to analyse two cases:
• To study the influence of household characteristics on the coupon effect, on retail consumption of Frozen Concentrated Orange Juice (FCOJ) and the relationship between household consumption behavior (demand) and coupon redemptions.
• To investigate effects of coupon promotional program by Florida Department of Citrus (FDOC) on coupon redemption behavior. During the period from July 1981 through June 1982, the FDOC had two coupon promotional programs.
Process involved in Demand Estimation
• It is important to have a representative sample of the segment being analyzed to deduce a reliable market understanding & insight that can be projected onto the bigger market later.
• Objective should be very clear before choosing the analyzing methodology. Here, for e.g. Logistic models can’t be used as they don’t provide demand equations but only predict choice of redemption (binary outcome).
• Any model being used for estimations is as good as its assumptions.
For e.g. had we assumed there is no simultaneity between the demand and choice equations then ordinary least squares (OLS) approach would have been valid, but progressing on this without carrying out a statistical test might not have been beneficial in long run.
The women age dummy variable created – if the age values were chosen differently the dummy variable might have lost its...
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