Economics For Manager Assignment-I

NAME: SANJOY SARKAR SEC: D ROLL: 34310 SUB: ECONOMICS FOR MANAGER ASSIGNMENT (I) CLASS: MBA-I (2011-13) DATE OF SUBMISSION: 27th July 2011

Sanjoy Sarkar

Sec D Roll: 34310

Economics For Manager Assignment-I

1. Brand : Blackberry Mobile Blackberry is a smartphone designed and develop by Research In Motion (RIM).Since its inception in 1999 it was viewed as the corporate toy as it was fully loaded with all the business functionality. Its Primary known for receiving (push) and sending email. One of the main attractive features of blackberry is it supports a large array of instant messaging features and including its own blackberry Messenger (BBM). But for the last couple of years Blackberry has completely changed its age old market view of being only the business phone. It started making an effort to identify the characteristics of the target market demographics such as age, age group, gender, marital status, location of the business, incomes of consumers and their preferences matters. Next psychographics such as cultural values, lifestyles, tendencies, choices and personal concerns matters. In the same way the kind of industry and typical market structure matter. In this instance the industry is the mobile phone company and the market structure is oligopolistic in nature. The latter means there are only a few sellers or rather brand names. In todays competitive environment, mobile phone market has become more customer oriented and product driven. Thus with the changing trends in behavior and shopping patterns by the consumers, mobile phone manufacturers need to focused on multi channel marketing approach to target the market to enhance their shopping experience and to increase sales. As on date it has successfully able to create its popularity among the college students by designing models and price keeping this new segment in mind. Now it has also become a status symbol among the students. BlackBerry followed a simple principle: Dont sell products, sell the brand.
Determinants of demand for the brand: Apart from the reduction of its own price to suit the students budget, incomes of the consumer and the price of the other Smartphone currently available in market, following are few more determinants of demand: I. Taste/Preference II. Trend III. Technology IV. Gender V. Age/Age Group VI. Government policy For taste/preference, trend and govt. policy we need to use a good proxy variable while working out elasticity of demand. Other determinants can be used directly from the available data for elasticity of demand. A good proxy for taste and trend can be Time and for govt. policy we can use a binary flag where 0 means policy is not favorable and 1 means its favorable.

Source: http://en.wikipedia.org/wiki/BlackBerry
Sanjoy Sarkar Sec D Roll: 34310

Economics For Manager Assignment-I

2. We know linear demand curve is given by: Y= 1+2X Here, X = Personal consumption and Y=Expenditure on durable good After running regression test on the data its found that R2=0.9835, 1 (Intercept) = -554.594 and 2 = 0.24841.This datas implies that with a unit change in personal consumption there will be a 0.25 unit change in the expenditure on durable goods. The R2 statistic is a measure of the extent to which the total variation of the dependent variable is explained by the regression. It takes on a value between zero and one. As the value of R2=0.9835 which is very high, suggests the regression equation formulated is a very good fit and represents most data samples accurately. From the residual plot randomness was seen which makes the variables good fit for estimation of expenditure on durable good w.r.t change in personal consumption. After running the regression analysis on ln(X) and ln (Y) its found that that R2=0.9835, 1 (Intercept) = -9.697 and 2 = 1.9056. This datas implies that with a unit % change in personal consumption there will be a 1.91% change in the expenditure on durable goods. Again, from the residual plot randomness was seen which makes the variables good fit for estimation of expenditure on durable goods w.r.t change in personal consumption. So we can conclude that the variables considered are good fit for the given function to determine the relationship between the two parameters.

X Variable 1 Residual Plot

0.02 0.01 Residuals 0 8.363295813 8.405635737 8.438885644 8.476912717 8.528152914 -0.01 -0.02 -0.03 -0.04 -0.05 -0.06 X Variable 1

Sanjoy Sarkar

Sec D Roll: 34310

Economics For Manager Assignment-I

3. We know Price Elasticity of Demand ( p) is given by, % Change in Quantity of Demand (D)

p =
% Change in Price (P) Statement I: Jai said I want 10 liters of petrol Analysis : Here D = 0 which makes p also equal to 0 as whatever be the price of petrol per liters demand is fixed i.e. 10 l. This concludes that its a vertical demand curve and the demand for the good (which is petrol here) is perfectly inelastic. A change in price will have no influence on quantity demanded.

Statement II: Veeru said I want Rs. 700 worth of petrol Analysis: Here P = 0 which makes p equal to (infinity) as irrespective of whatever quantity of liters petrol comes at Rs. 700/- the budget for petrol is fixed i.e. 700 INR. This concludes that the good is perfectly elastic. Any change in price will see quantity demanded fall to zero. This demand curve is associated with firms operating in perfectly competitive markets. So its concluded that price elasticity of Veeru is higher than Jai.

Sanjoy Sarkar

Sec D Roll: 34310