Question

The hearing aid battery market has been quietly, but steadily, growing. This growth is attributed to an aging population and the improvement in hearing aid technology. Zinc air replacement batteries use air outside the battery as a source of power. There is a tab on the battery which seals the air holes to ensure freshness until the customer is ready to use the battery. To activate the battery, simply remove the tab, wait one minute to allow air to enter and activate the ingredients, and insert the battery into your hearing air. Zinc air batteries last 3 to 21 days, depending on the actual hearing aid and battery size. Costco is a major competitor in this market. In 2010 Costco reported 11.6 million zinc battery customers, who purchased a total of $ 1.56 billion of disposable hearing aid batteries. In the United States there were 54.8 million disposable hearing aid battery customers, who purchased $ 4.69 billion in this category. Calculate the heavy usage index for Costco customers. Report your answer rounded to two decimal places.

Answer 1

Calculate the heavy usage index for Costco customers. Report your answer rounded to two decimal places.

Data Provided in the question:

Particulars	Customers in number	Amount Spent	Average Purchase Per Customer
Costco	11.6 million	$ 1.56 billion	$1.56 Billion /11.6 Million
United States	54.8 million	$ 4.69 billion	$4.69 Billion / 54.8 Million

Heavy usage index defines how heavily the consumers of a brand use the category (to which brand belongs) as compared to any average customer of that category

Heavy Usage Index = Average Total Purchases in Category By Brand Customers / Average Total Purchases in Category By All Customers of that Category

= (1.56 / 11.6) / (4.69 / 54.8)

= (1.56 * 54.8) / (11.6 * 4.69)

= 85.488 / 54.404

Heavy Usage Index for Costco Customers = 1.57

This implies that the customers of Costco use the zinc battery hearing aid 1.57 times more than any average customer of zinc battery hearing aid.