Develop a payoff matrix - Is there a saddle point? - Determine the promotion strategies of firm A and firm B - Compute the value of the game
Assume that two firms are competing for market share for a particular product. Each firm
is considering what promotional strategies (no promotion, moderate promotion or heavy
promotion) to employ for the coming period. The
develop the following data for varying degree of promotions.
i. No promotion, moderate promotion and heavy promotion for both firms
will result in no change in the percentage of their market shares
ii. Firm A with no promotion: its market share will show 5% decline in its
market share when firm B uses moderate promotion and 10% decline
when firm B uses heavy promotion
iii. Firm A using moderate promotion: its market share will increase by 12%
when firm B chooses no promotion and 6% growth will be recorded when
firm B uses heavy promotion.
iv. Firm A using heavy promotion: its market share will increase by 14 when
firm B uses no promotion and 9% when firm B uses moderate promotion.
Based on the forgoing information,
- Develop a payoff matrix
- Is there a saddle point?
- Determine the promotion strategies of firm A and firm B
- Compute the value of the game
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