Family Income and Spending Capacity

Abstract

A car salesman has three prospects, all of whom own 6-year old cars. One is a 4-person family with $6,000 income; the second, a 6-person family with $8,000; the third, a married couple earning $5,000. On the basis of spending capacity alone, which is the best prospect?

The author of this article shows that the total-income criterion, commonly used in marketing research, yields the wrong answer.