Accounting, Finance, SPSS Term Paper: Conservatism

Conservatism
Student Name
Institution Affiliation
Conservatism
Accounting conservatism are the guidelines surrounding financial reports, which compel accountants to exercise a high level of verification and use the solutions to predict the least numbers when confronted with uncertainty. The longstanding principle tends to protect financial information users from the consequences of inflated revenues and to guarantee the potential liabilities are put down as soon as they are recognized. This essay purposes to examine how the conservatism principle can be used in the Dolphin energy company. Additionally, it will also touch on the pros and limitations of conservatism when applied successfully.
Company Description
Dolphin uses mass-market techniques to serve its products. In mass marketing, the market addresses all market addresses all parts of the market as if they are the same. This is also known as undifferentiated marketing. Market segmentation includes demographic, behavioral, demographic and psychographic. The demographic segmentation of Dolphin includes the age and income. Dolphin is trying to reach three different target markets. The first segmentation is the people between 18 to 24 years who belong to college or have just completed college. The people who belong to this market have access to a modest income that takes the form of parental funds. Additionally, the beverage assists with studies and recreation. The second target market is the people belonging to the age bracket of 14-18. Studies have shown that the people within this age bracket are more energetic than older people (Alsunni, 2020). Dolphin seeks to replenish water, carbohydrates and electrolytes in people who work out or participate in physical education. Research suggests that the energy drink not only provides additional energy but also improves mood, enhances one’s physical endurance, reduces mental fatigue and increases reaction time. Dolphin satisfies customers who have health concerns and focuses on a wellness program at a reasonable price. The third target market is the people who belong to the age bracket of 24 to 34. People within this age bracket often tend to exert themselves physically. The energy drink replenishes lost energy and reduces mental fatigue whenever someone puts in over time. Additionally, these people are often able to afford the price of buying energy drinks. A recent analysis showed that 44% of energy drink customers belong to the age bracket of 18 to 24, 36% belong to the age bracket of 14 to 18 and 20% belong to the age bracket of 24 to 34.
Identifying the Need for Accounting Conservatism
Microenvironments consist of consumers, competitors and partners. Firstly, a change in consumer preference can negatively impact the company returns (Glasserman & Mamaysky, 2016).. For instance, customers may stop buying Dolphin energy drinks due to the rise of new products in the market. New products tend to be cheaper in order to build a customer base. Secondly, the company has potential competitors like Red Bull, Shark and Rhino. These energy drink companies have been in the market for many years and will have a loyal customer base. These competitors might negatively impact the sale of Dolphin. That being said, Dolphi...