Case Study:
Global Motors
Nick Thomas, CEO of Global Motors, has agreed with Cory Rogers of CMG Research to use an online survey to assess consumer demand for new energy-efficient car models. In particular, the decision has been made to purchase panel access, meaning that the online survey will be completed by individuals who have joined the ranks of the panel data company and agreed to periodically answer surveys online. While these individuals are compensated by their panel companies, the companies claim that their panel members are highly representative of the general population. Also, because the panel members have provided extensive information about themselves such as demographics, lifestyles, and product ownership, which is stored in the panel company data banks, a client can purchase this data without the necessity of asking these questions on its survey. Cory’s CMG Research team has done some investigation and has concluded that several panel companies can provide a representative sample of American households. Among these are Knowledge Networks, e-Rewards, and Survey Sampling International, and their costs and services seem comparable: for a “blended” online survey of about 25 questions, the cost is roughly $10 per complete response. “Blended” means a combination of stored database information and answers to online survey questions. Thus, the costs of these panel company services are based on the number of respondents, and each company will bid on the work based on the nature and size of the sample. Cory knows his Global Motors client is operating under two constraints. First, ZEN Motors top management has agreed to a total cost for all of the research, and it is up to Nick Thomas to spend this budget prudently. If a large portion of the budget is expended on a single activity, such as paying for an online panel sample, there is less available for other research activities. Second, Cory Rogers knows from his extensive experience with clients that both Nick Thomas and ZEN Motors’ top management will expect this project to have a large sample size. Of course, as a marketing researcher, Cory realizes that large sample sizes are generally not required from a sample error standpoint, but he must be prepared to respond to questions, reservations, or objections from Nick or ZEN Motors managers when the sample size is proposed. As preparation for the possible need to convince top management that CMG’s recommendation is the right decision for the sample size for the Global Motors survey, Cory decides to make a table that specifies sample error and cost of the sample. For each of the following possible sample sizes listed below, calculate the associated expected cost of the panel sample and the sample error.
1. 20,000
2. 10,000
3. 5,000
4. 2,500
5. 1,000
6. 500
Your answer must be, typed, double-spaced, Times New Roman font (size 12), one-inch margins on all sides, APA format and also include references.