9-2: 2. Four key marketing decision variables are price ( P ), advertising ( A ), transportation ( T ), and product quality ( Q ). Consumer demand ( D ) is influenced by these variables. The simplest model for describing demand in terms of these variables is:
D = k – pP + aA + tT + qQ
where k, p, a, t, and q are constants. Discuss the assumptions of this model. Specifically, how does each variable affect demand? How do the variables influence each other? What limitations might this model have? How can it be improved? Solution Tip: This is an essay question and does not require calculation.
Please be sure your work is organized, legible, and your responses are substantive. You need to submit all details of your work including excel sheets used to arrive to the solution. It is not enough to attach your excel sheet. You MUST provide interpretation of results and describe conclusions.