Emenyi Company Limited is considering using Markov analysis to analyze brand switching between three different brands of its Detox medicated soap; Detox White, Detox Green and Detox Orange. The company’s marketing specialist conducted a survey and gathered data which she utilized to estimate the following transition matrix. The matrix shows the probability of moving between brands each month: From White Green Orange White 0.78 0.11 0.11
Emenyi Company Limited is considering using Markov analysis to analyze brand switching
between three different brands of its Detox medicated soap; Detox White, Detox Green and
Detox Orange. The company’s marketing specialist conducted a survey and gathered data
which she utilized to estimate the following transition matrix. The matrix shows the
probability of moving between brands each month:
From White Green Orange
White 0.78 0.11 0.11
Green 0.04 0.94 0.02
Orange 0.20 0.04 0.76
The current (month 1) market shares are 50%, 20% and 30% for Detox White, Detox Green
and Detox Orange respectively.
Required
(i) What will be the expected market shares for each of the three brands after two months
have elapsed (that is, in month 3)?
(ii) What is the long-run prediction for the expected market share for each of the three
brands?
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