# BAC21 The market for soft drinks at USC: Survey Data Analysis Assessment Answer

BAC21 Group Research Project

Project Title: The market for soft drinks at USC

USC is a large university attended by thousands of students every day on week days. The purpose of this project is to understand the students’ soft drinks market at the university. The market for drinks is measured in terms of 375ml cans. This type of project requires the students to demonstrate their ability to select a sample, analyse the data collected and prepare a written report of their analysis. Since it was impossible to interview every student visiting the university last semester, the subject coordinator proposed that only BAC21 students should be interviewed.

What should you do?

1. Form a group of 4-5 students for the project.
2. The Lecturer has exported the anonymous responses to an Excel file. Your project group will be expected to select a random sample of 100 responses for analysis.
3. Analyze the survey sample you have selected for your group. The best way to do this will be to convene a meeting after class every week and discuss how you could apply the analytical techniques covered in your classes so far on the survey data.
4. Submit the following:

A group report of around 800 to 1000 words. This is to be handed to your teacher in your second class of week 11. The report must respond to the specific questions asked in a report format.

Introduction

Provide a brief introduction to what this assignment is about and how was your sample selected?

Data Analysis

This section must answer to the following specific questions

1. What proportions of the students in your sample are local and what proportion are international?
2. What is the relationship between price and average quantity consumed by students?
3. What are the most popular and least popular soft drinks among students?
4. How loyal are students to their brand? (Do students change their preference when they receive a 25% or 40% discount on their preferred drink?)
5. How does the demand (price-quantity relationship) of international students differ from that of local students?
6. What are the most and least popular drinks among local students? How does this compare with the preferences of the international student?
7. How likely is it that the student will choose soft drink (Pepsi, Coke etc.) as their first preference? Provide 95% confident interval estimates and interpret your results.

Summary (20% marks):

Provide a quick summary of the main results from your analysis of the data and critically evaluate the validity of the sample data.

Survey Data Analysis

Introduction

USC is a large university attended by thousands of students every day on week days. The purpose of this project is to understand the students’ soft drinks market at the university. The market for drinks is measured in terms of 375ml cans.

Hence, the project involves selection of a sample, analysis of the collected data collected and presenting the findings in this report. The sample is based on the population of BAC21 students visiting the university last semester, as proposed by the subject coordinator.

For selection of sample from the above population, the requirement was to include a proportion of international as well as domestic students. Keeping this in mind, a random sample of 100 students was selected from the given data.

# Data Analysis

## 1. International Students versus Domestic Students

On analysis of the sample data, it was found that the international students were very few in number as compared to the domestic students. The selected sample included 10 per cent international students and 90 per cent domestic or local students. This can be further represented through following pie chart:

## 2. Price versus Average Quantity Relationship

For purpose of this section of the report, the various price points and estimated consumption at these price points was utilized. The average of estimated consumption was arrived at for each of the price points, namely: \$0.50, \$1.00, \$1.50, \$2.00, \$2.50, \$3.00, \$3.50, \$4.00, \$4.50, and \$5.00. The results can be presented graphically as follows:

Clearly, it can be seen in the above graph that as the price point increases average consumption of units decline. Hence, we can conclude that there is inverse relationship between the price per unit and average units consumed.

## 3. Most Popular and Least Popular Drinks

For purpose of this section of the report, the various types of beverages and average consumption for each of these beverages were utilized. The average consumption was arrived at for each of the beverages, namely: Soft drinks, fruit juices, tea/coffee, energy drinks and others (including milk drinks, water, etc.). The results can be presented graphically as follows:

Clearly, it can be seen in the above graph that the beverage group named ‘Others’ that includes water, milk drinks etc. is the most popular drink with average consumption at 19.88 units. On the contrary, ‘Energy drinks’ are the least popular drinks among the students averaging at only 1.17 units. The second most popular beverages are ‘Tea and Coffee’ at 4.82 units of average, followed closely by ‘Soft drinks’ at 4.74 units of average consumption.

## 4. Loyalty to the Brand

Brand loyalty refers to the behaviour where a customer stays with a brand or keeps purchasing the same brand irrespective of the change sin prices. That is, if price of Brand A product was to go up by 25%, the customer will still keep buying Brand A product irrespective of similar products or substitutes being available at lower price.

In the case of sample study, we have data for respondents indicating change in preference if the price of the second preference beverage was to fall. The study takes responses for two scenarios:

1. If price of second preference was cheaper by 25% as compared to the first preference: Out of a sample of 100 respondents, as many as 27 respondents or 27% of the sample population indicated that they will switch to second preference in this scenario. This indicates that the remaining respondents to the tune of 73% remained loyal to the same brand irrespective of second preference being much cheaper.
2. If price of second preference was cheaper by 40% as compared to the first preference: Out of a sample of 100 respondents, as many as 61 respondents or 61% of the sample population indicated that they will switch to second preference in this scenario. This indicates that the remaining respondents to the tune of 39% still remained loyal to the same brand irrespective of second preference being cheaper by almost half of the price they pay.

## 5. Price-Quantity Relationship of International versus Local Students

For purpose of this section of the report, the international and local students were segregated in a separate spread sheet and ‘subtotal’ command was used to arrive at average estimated consumption at various price points. The average of estimated consumption was arrived at for each of the price points, namely: \$0.50, \$1.00, \$1.50, \$2.00, \$2.50, \$3.00, \$3.50, \$4.00, \$4.50, and \$5.00. The results can be presented graphically as follows:

Clearly, it can be seen in the above graph that both international students as well as local students indicate an inverse relationship between average consumption and price per unit. As price increases, consumption declines for both students. However, the average estimated consumption for international students is much lower as compared to local students. But as price keeps increasing, the difference between average consumption for the two keeps decreasing and towards the end of the spectrum, international students are consuming a little more than local students. This may be an outlier effect as at the \$3.50 price point, international student average consumption spikes up to 3.2.

## 6. Popularity of Various Beverages for International versus Local Students

For purpose of this section of the report, the international and local students were segregated in a separate spread sheet and ‘subtotal’ command was used to arrive at average consumption for each of the beverages, namely: Soft drinks, fruit juices, tea/coffee, energy drinks and others (including milk drinks, water, etc.). The results can be presented graphically as follows:

Clearly, it can be seen in the above graph that the beverage group named ‘Others’ that includes water, milk drinks etc. is the most popular drink with grand average consumption at 19.88 units (international students at 16.5 and local students at 20.3).

On the contrary, ‘Energy drinks’ are the least popular drinks among the students averaging at only 1.2 units (international students at 3.6 and local students at 0.9). Hence, the preference trend patterns are similar.

The remaining drinks average consumption patterns are also similar between the local students and international students, with slight differences. While international students prefer more of fruit juices, local students prefer more of soft drinks and tea/coffee.

## 7. Confidence Interval Construction for Soft Drink as First Preference

The sample data lists out preferences of various students between various available beverages, namely, Soft drinks, fruit juices, tea/coffee, energy drinks and others (including milk drinks, water, etc.). The preference of 1 for Soft drinks such as pepsi, coke oocurs 23 times in the sample data:

 Preference Number Frequency Coke/Pepsi 23 0.23 Not Coke/Pepsi 77 0.77

To construct 95% confidence interval,

α = 0.05, α/2 = 0.025

n = 100

^ ^ = 23%

^ ^ + Z0.025 = √^ * (1-^)/n = 0.23 +1.96

= 0.23 + √0.23 * (1-0.23)/100

= 0.23 + 0.421

= [0.2721, 0.1879]

At 95% confidence level, the interval estimate that student will choose soft drink (pepsi etc.) as first preference lies between 18.79% and 27.21%.

# Summary

As seen above, a population of 200 BAC21 students visiting USC campus were considered, out of which a representative random sample of 100 students was selected for data analysis purpose. It was found that the international students formed only about 10% of the total population. The beverages preferences were discussed where all students preferred ‘Other’ beverages the most while ‘Energy drinks’ were the least popular. Further, while international students like fruit juices, local students prefer tea, coffee and soft drinks. All the students depict an inverse relationship between beverage price and consumption, the trend being stronger among international students.