BAC21:Management - Soft Drinks Market - Research Project Assessment Answer

Management Assignment

Assignment Task

SOFT DRINKS MARKET

Introduction

This assignment was focused on determining the students’ preference of soft drinks in SCU University. A student sample was selected to represent the entire population of thousands of them. Sampling was randomised and based on convenience. Selection of the sample was an important part of the exercise since it largely determines the bias in the results. As such, possible biasness in the results of the analysis was effectively avoided through the randomisation of the sample selection (Ross et al, 2013). Students were previously issued with questionnaires to collect information about their soft drink preferences. They also responded to an online survey where important information was collected. This analysis presents the process and results obtained from the research.

Basic analysis

From the data collected, 25% of students were international students while the rest were local. The most popular soft drinks included Coke and Pepsi. The least popular drinks included Cascade and Passiona. Students generally preferred carbonated drinks to non-carbonated ones. The participants of the research showed little loyalty to the brands they often take. Price promotions seemed to be a factor that could change their preference instantly (Virvalaite, Saladiene & Skindaras, 2015). However, partial loyalty was observed on the two most popular brands. That is, price promotions only affected the two brands as students were unlikely to take on other brands even with price changes.

Behaviour of local students compared with international students

Brand loyalty was stronger among local students. 65% of local students indicated unwillingness to change brand even at a 25% discount on an alternative drink. However, their behaviour on higher discount rates would be unpredictable. On a discount of 60%, more than 73% of the local students would change to the cheaper alternative. This conclusion is on the assumption that the price for the primary choice of drink remains constant (Wieseke, Alavi & Habel, 2014). If discounts were offered on both choices, the behaviour would be equally unpredictable. On the other hand, international students showed considerably lower levels of loyalty to the brands they would consume on a daily basis. Their choice of soft drink was not based on the price but other factors. Many factors, including price promotions, affected their choice of drink. For this group of students, the choice of drink did not really matter as long it was carbonated. This group also showed higher preference to non-carbonated soft drinks compared to local students.

The price-quantity relationship is stronger among international students where even slight price changes are able to change the students’ choices (Lu, Weathers & White, 2016). It was observed that discounts as little as 25% would cause 68% of international students to change their choice of soft drink. Besides influencing the choice of drink, a discount would increase the frequency of consumption for most of them. 33% of them indicated that they would increase their consumption if the drink was offered at 40% discount. For this group, the price was one of the sensitive factors that affected their purchase behaviour. On the other hand, local students exhibited a weaker price-quantity relationship. Discounts of less than 25% were likely to affect the choices of 35% of the local student population. Other factors than price were stronger influences of their choices of soft drink. However, with discounts over 40%, up to 58% of the local students would change their favourite choice of soft drink.

The most popular drinks among local students are Coke and Pepsi. 78% of local students indicated loyalty to these two brands while the remaining showed interest in other drinks including energy and caffeinated drinks. The least popular drinks among the local students were Cascade and Passiona. Cascade sparkling black currant is carbonated while passion is a non-sparkling passion-flavoured juice. Cascade was more popular among international students even though passions remained unpopular.

Local students are more loyal to brands than international students. Local students showed little sensitivity to price changes and a weak price-quantity relationship. Discounts up to 40% were unlikely to change their quantity of consumption, although they could change the choice of brand.

Advance scenarios

If a student was randomly selected from BAC21 class the likelihood that they will be a local student is 75% and the likelihood that they will be an international student is 75%. The selected sample was a simple random selection. The likelihood that any randomly selected student will prefer Pepsi or Coke is 82%. Most students indicated preference and loyalty to carbonated soft drinks than to the non-carbonated options.

Pepsi’s claim of holding at least 25% market share of the entire soft drinks market could be a valid claim at 95% confidence interval. Since the combined share of the carbonated soft drink market is 78%, this statistical conclusion is reasonable. Other factors such as unreliability of measures and the chance of occurrence of type I error in the making of that statistical conclusion are both low. There were also minimal threats to the internal validity of the study, which makes the conclusions more reasonable (Alexander et al., 2015).

Summary

The proportion of local to international students in the sample was 75% to 25%. Local students indicated higher brand loyalty than international students. Both groups of students were affected by discounts, although variably. The price-quantity relationship was stronger among international students than local students. Discounts affected the quantity of drinks consumed by international students more than it affected local ones. The most popular drinks were Pepsi and Coke with a 78% combined share of the market. Pepsi’s claims of having a market share of at least 25% are valid.