1. Show the two-period tree diagram for a customer who last purchased Red Pop. What is the probability that this customer purchases Red Pop on the second purchase? 2. What is the long-run market share for each of these two products? 3. A Red Pop advertising campaign is being planned to increase the probability of attracting Super Cola customers. Management believes that the new campaign will increase to 0.15 the probability of a customer switching from Super Cola to Red Pop. What is the projected effect of the advertising campaign on the market shares?
Management of the New-Fangled Soft drink Company believes that the
To
From Red Pop Super Cola
Red Pop 0.9 0.1
Super Cola 0.1 0.9
1. Show the two-period tree diagram for a customer who last purchased Red Pop. What
is the probability that this customer purchases Red Pop on the second purchase?
2. What is the long-run market share for each of these two products?
3. A Red Pop advertising campaign is being planned to increase the probability of attracting Super Cola customers. Management believes that the new campaign will increase to 0.15 the probability of a customer switching from Super Cola to Red Pop. What is the projected effect of the advertising campaign on the market shares?
Trending now
This is a popular solution!
Step by step
Solved in 4 steps with 1 images