Entry and Exit Demand Analysis: Economics

4767 Words Feb 3rd, 2014 20 Pages
Entry/Exit Demand Analysis
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Peter R. Dickson and Alan G. Sawyer (1984) ,"Entry/Exit Demand Analysis", in NA - Advances in Consumer Research Volume 11, eds. Thomas C. Kinnear, Provo, UT : Association for Consumer Research, Pages: 617-622. Advances in Consumer Research Volume 11, 1984 ENTRY/EXIT DEMAND ANALYSIS Peter R. Dickson, The Ohio State University Alan G. Sawyer, The Ohio State University ABSTRACT Past methods of measuring consumer response to the price of a branded good are reviewed and critiqued. A new approach- Entry/Exit Demand Analysis--is described. The method borrows from and improves past methods. Some initial evidence about the technique's test-retest reliability is presented. INTRODUCTION One of the most
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The me sage is clear. We must strive even harder to find efficient and valid ways of monitoring demand and price elasticity. This paper reviews some of the current techniques that attempt to directly measure price elasticity. It does not discuss the use of elegant econometric models fitted to historical data; data which may have little relevance to the realities of today's marketplace. A new method is then presented, called Entry-Exit Demand Analysis. It is a refinement of previous techniques and an advance in terms of its face validity, its operational ease, and its efficiency. PREVIOUS MEASURES OF CONSUMER RESPONSE TO PRICE Most of the early published work on measuring consumer's subjective response to price assumed that two price limits exist. The upper limit is the price above which the product was judged to be "too dear" and by implication too expensive to purchase. The lower limit is the price below which the quality of the product was inferred to be suspect and by implication not worth the risk of purchasing. Stoetzel (1969) established these price points for various commodities in studies undertaken in France in the late 1940's. The focus was on a product group such as "a radio set" and not on a particular brand or item that could be examined and whose quality could be directly assessed. Two price acceptance curves were generated from a sample of consumers and the difference between these curves enabled the calculation of
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