Management of the New-Fangled Soft Drink Company believes that the probability of a customer purchasing Red Pop or the company's major competition, Super Cola, is based on the customer's most recent purchase. Suppose that the following transition probabilities are appropriate: From Red Pop Super Cola Red Pop 0.9 0.1 To Super Cola 0.1 0.9 a. Show the two-period tree diagram for a customer who last purchased Red Pop. b. What is the probability that this customer purchases Red Pop on the second purchase? c. What is the long-run market share for each of these two products?

Management of the New-Fangled Soft Drink Company believes that the probability of a customer purchasing Red Pop or the company's major competition, Super Cola, is based on the customer's most recent purchase. Suppose that the following transition probabilities are appropriate: From Red Pop Super Cola Red Pop 0.9 0.1 To Super Cola 0.1 0.9 a. Show the two-period tree diagram for a customer who last purchased Red Pop. b. What is the probability that this customer purchases Red Pop on the second purchase? c. What is the long-run market share for each of these two products?

A First Course in Probability (10th Edition)

10th Edition

ISBN:9780134753119

Author:Sheldon Ross

Publisher:Sheldon Ross

Chapter1: Combinatorial Analysis

Section: Chapter Questions

Problem 1.1P: a. How many different 7-place license plates are possible if the first 2 places are for letters and...

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Question

100%

Required:

a. Show the two-period tree diagram for a customer who last purchased Red Pop.

b. What is the probability that this customer purchases Red Pop on the second purchase?

c. What is the long-run market share for each of these two products?

d.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 probability of a
customer purchasing Red Pop or the company's major competition, Super Cola, is based on
the customer's most recent purchase. Suppose that the following transition probabilities are
appropriate:
From
Red Pop
Super Cola
Red Pop
0.9
0.1
To
Super Cola
0.1
0.9
a. Show the two-period tree diagram for a customer who last purchased Red
Pop.
b. What is the probability that this customer purchases Red Pop on the second
purchase?
c. What is the long-run market share for each of these two products?
d. 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?

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