J&J has given you $12 million to spend on advertising Huggys diapers during the next 12 months. Atthe beginning of January, Huggys has a 30% market7.9 Conclusion 401share. During any month, 10% of the people whopurchase Huggys defect to brand X, and a fraction0.2a1y2 of customers who usually buy brand X switchto Huggys, where a is the amount spent on advertisingin millions of dollars. For example, if you spend $4million during a month, 40% of brand X’s customersswitch to Huggys. Your goal is to maximize J&J’saverage market share during the next 12 months,where the average is computed from each month’sending share. Determine an appropriate advertisingpolicy. (Hint: Make sure you enter a nonzero trialvalue for each month’s advertising expense or Solvermight give you an error message.)
J&J has given you $12 million to spend on advertising Huggys diapers during the next 12 months. At
the beginning of January, Huggys has a 30% market
7.9 Conclusion 401
share. During any month, 10% of the people who
purchase Huggys defect to brand X, and a fraction
0.2a1y2 of customers who usually buy brand X switch
to Huggys, where a is the amount spent on advertising
in millions of dollars. For example, if you spend $4
million during a month, 40% of brand X’s customers
switch to Huggys. Your goal is to maximize J&J’s
average market share during the next 12 months,
where the average is computed from each month’s
ending share. Determine an appropriate advertising
policy. (Hint: Make sure you enter a nonzero trial
value for each month’s advertising expense or Solver
might give you an error message.)
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