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Demand Analysis

1022 words - 5 pages

Making Decisions Based on Demand & Forecasting
Assignment 1

The Demand Analysis of Domino’s Pizza Established in Woodruff SC
This is a demand analysis on the decision-making process of whether Domino’s Pizza should enter the area of Woodruff, SC. It is going to reflect the research of demographics, population size, and average income per household, as well as the advertising costs for the competitor in the same market and area. The research is based on the variables taken from the years 2000, 2005, and 2010. With this criterion entered into the demand analysis equation it will assist in the decision-making process of if they should enter Woodruff’s market area or not. The logic of ...view middle of the document...

The required data of input in Woodruff, SC for the variables entered into the demand analysis were found by conducting research through the internet and these were the results that were found on the determinants of the demand function in population size and average income.
Years of data Population Size Years of Data Average Income
2000 4229 2000 $24,824
2005 4105 2005 $28,478
2010 4090 2010 $35,064

Another set of the demand function determinant variables used is, the price of the average pizza sold among the competition of 15 dollars and the cost of advertising for the competition. The following data is listed below for the two variables in the three rears used above:
Years of Data Price of Average Pizza Competitor’s Advertising
2000 $15.00 $542
2005 $15.00 $493
2010 $15.00 $612

When utilizing the determinant such as average price for the consumer to purchase; the demand is a favorable association to the effects of the demand function curve. The dependent variable used, is the price of pizza at an average price for purchase to consumers. The effects of the demand will be affected by the advertising costs in the way of the sales for the year and how much is being spent on advertising. If the sales are not of a significant amount then the demand will begin to decrease because the cost is increasing.
By comparing total sales divided by total pizza sales for the year, will then give you the Market share equivalent to use in the next step of the analysis. The next step is to use the data found and input into Excel using the linear regression analysis. From this you can then determine the coefficient of determination which will then return the results of the decisions that encompass the main decision of opening a Domino’s in the Woodruff area. The next data to input into our demand function and analysis is the value given when taking Woodruffs population divided by the total population which will give you an equivalent of the percentage to put into the demand equation.
By taking the two percentages and...

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