Estimation of Demand of Orange Market Experimentation

Presented by:-Utkarsh Saxena

Introduction Market experimentation of demand of 3 types of Oranges,

Florida Indian river, Florida interior and California orange.

Grand rapid had best sited demographics and conditions for demand estimation.

Nine super markets.31 Consecutive days. Price change within 16 Cents. Adequate supply.

Price ElasticityElasticity is the measure of responsiveness of one variable

to another. The greater the elasticity, greater the responsiveness. Price elasticity of demand is % change in quantity

demanded individual by the % change.

Demand EstimationEstimation the amount of demand for a product or service.Demand estimation for the firm’s product is essential and

continuing. Estimation demand provide manager with accurate way

predict the future demand.

Cross Price Elasticity Of Demand

Cross price elasticity measured the responsiveness of demand for good X and change in the price of good Y.

Measured to which degree of good is a substitute or complementary.

Cross price elasticity of demand b/w two complementary goods is negative.

Market Experimentation

Method of demand estimation. Experiments conducted in market place.Record the responses of consumer.Select several market whit similar demographics.

Observations

Price elasticity for orange is fairly high. Ed for FIO of 3.07 indicate that 1% inc in price lead to 3.07% decline in demand.

Cross price elasticity of demand b/w two type of florida orange where large than 1 close to 0 with respect to californian orange.

Learning OutcomesFor 1% change in price of florida indian orange ,there is a

considered high change in demand for florida interior and vicevesa.

There for this suggest the consumer regard the two type of orange of Florida as close substitute, they did not view California orange.

Q 1. In light of the case define a test market? When should a firm take help of market experiments to forecast demand?

 Ans:-Test Market, in the field of business and marketing, in a geographic region or demographics  group used to gauge the viability of a product or service in the mass market  prior to a wide scale roll-out. The criteria used to judge the acceptability of a test market region or group includes:

A population that is demographically similar to the proposed target market and relative isolation from densely populated media markets so that advertising  to the test audience can be efficient and economical.

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