If sales and per capita income are positively related, classify all variables as dependent, independent, moderating, extraneous, or intervening.

If sales and per capita income are positively related, classify all variables as dependent, independent, moderating, extraneous, or intervening.

Response to other student, not less than 450 words, at least 2 peer-reviewed sources and 1 biblical integration. References in APA format.

Question: 3.5

An automobile manufacturer observes the demand for its brand increasing as per capita income increases. Sales increases also follow low interest rates, which ease credit conditions. Buyer purchase behavior is seen to be dependent on age and gender. Other factors influencing sales appear to fluctuate almost randomly (competitor advertising, competitor dealer discounts, introductions of new competitive models).

a. If sales and per capita income are positively related, classify all variables as dependent, independent, moderating, extraneous, or intervening.

While classifying all of the different variables of this scenario, it’s important to first identify the independent variable (IV) and dependent variable (DV). It is also safe to assume since it is a car manufacture, the discussion is concerning new car sales. As Prieto states, “We can observe a positive correlation between income and demand for luxury segments, new as well as used” (Prieto & Caemmerer, 2013, p. 749). While car sales are directly related to per capita income and will go up and down depending on this factor, car sales themselves have no direct effect on income levels. In this case the dependent variable is car sales and the independent variable is per capita income. The moderating (MV) variables in this situation is the interest rates used to finance the vehicles and the introductions of new competitive models.

 

While interest rates are also an independent variable, it does not carry the direct influence on car sales that per capital income does. It definitely affects car sales but only after the necessary income levels are present which is why it’s best categorized as a moderating variable. After credit approval has been established, based off of income ofcorse interest rates are determined and in many cases negotiated. As Carter points out, “During periods of easy credit, lenders are so tightly interwoven into the car-buying process that dealers make money just by getting loans approved” (Carter, 2015, p. 198). Because of this the base interest rates are not as significant as the negations of the overall purchase of the vehicle. With the introduction of new competitive models, the same stands true as with interest rates in regards to the need for sufficient income to be present first but this variable can be extremely disruptive or be a great benefit to sales depending on whether your introducing the new model or dealing with a competitors introduction of a new model.

 

In this case there are also several extraneous variables (EV’s). These would include competitor advertising and competitor dealer discounts. It could also be argued that the introduction of new models could be an EV instead of an MV depending on the perceived affect it could have on a particular market segment sales. Competitor advertising and discounts are extraneous variables because these are assumed to be constant or happening all the time making them part of the industry competitive structure lacking any significant effect on either the independent or dependent variables.

b. Comment on the utility of a model based on the hypothesis.

            Concerning the utility of the model I believe it is structured in a way that will produce significant and actionable data. Establishing the core model of the structure being the independent and dependent variables as the key to making it relevant. The effect of the chosen DV and ID could be easily seen by comparing the amount of new car dealerships in our country’s poorest counties vs it’s richest. As with every product or service, companies market and sell their product to those that have first been financially qualified to buy them. I also believe the additional variables have been accurately categorized according to their impact and effect on the DV and ID.

 

As a Biblical integration, I would use the following scripture, “You shall do no wrong in judgement, in measures of length or weight or quantity. You shall have just balances, just weights, a just ephah, and a just hin. I am the lord your God, who brought you out of the land of Egypt” (Leviticus 19:35-36, ESV). These verses in context pertain to business dealings and intertwined within them God shows the importance of measurement accuracy. The verses start out with “you shall do no wrong in judgement” referring to being without bias. The balances, weights, ephah (bushel), and hin (unit of liquid) should all be just or accurate. In reference to the above model, this should be our goal. To make the model as just and accurate as possible without bias, without our personal judgements.

 

References

Carter, B. R. (2015). An introduction to automobile dealerships. Appraisal Journal83(3), 193-200. Retrieved from http://go.galegroup.com.ezproxy.liberty.edu/ps/i.do?p=GRGM&u=vic_liberty&id=GALE|A430717148&v=2.1&it=r&sid=summon

 

Prieto, M., & Caemmerer, B. (2013, September). An exploration of factors influencing car purchasing decisions. International Journal of Retail & Distribution Management41(10), 738-764. Retrieved from http://www.emeraldinsight.com.ezproxy.liberty.edu/doi/full/10.1108/IJRDM-02-2012-0017

 

The Holy Bible, English Standard Version (ESV)

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