PART 1: Please answer any 2 of the 4 questions.

Added on - 22 Sep 2019

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PART 1: Please answer any 2 of the 4 questions. Each question is worth 100 points.1.Assume you are contemplating the launch of a new product your firm has designed. There ispressure internally for the product to become profitable as soon as possible and you arecontemplating the use of coupons to encourage trial. You conduct a test market – you selecttwo cities and launch the product without coupons in one and with coupons in the other. Youare examining the data from these test markets.a.What would you conclude about the advisability of using coupons?Control groupCoupon groupTrial rate (%)7.510Repeat rate (%)2010My advice is that we should not encourage product coupons as we have less repeat ratewhen compared to the coupon without group so we can conclude that we have more profitfrom without coupon group when compared to the with product coupon group.b.You have reason to believe that the coupon effectiveness could be improved because asingle coupon may generate trial but is insufficient for long term consumer behavior.You decide to explore the role of multiple coupons. Which of the following sequence ofcoupons do you think would be most effective? Why?Plan A40% off40% off40% off40% offPlan B10% off20% off30% off40% offPlan C40% off30% off20% off10% offMy suggestion would be Plan C because in plan A if we give 40% consequently will be aloss as well as further also people might expect same rebate which might be a problemtoo, in plan B raising the discount rates will not be so impressive for customers and evenif company is not stable it will be difficult to follow the coffer given so I suggest plan C asbest as we provide 40% discount people will be easily attracted and it even helps inincrease in profit over the period as we are reducing the rebate offer.
c.Based upon your answer to b, you select a plan for the use of multiple coupons. You donot have time for conducting another test market. So, you conduct a quick experimentand find that of 100 participants presented with your new coupon plan, 15% try theproduct at some time during the sequence of coupons. What should the repeat rate beto make the use of coupons worthwhile?Based upon my answer as plan C the repeat rate should be around 6% as itreaches around 90% and we even know it is very tough to achieve 100% so therequired return rate will be 6%d.It’s a couple of years later. The launch of your product was successful and it is aprofitable product in the line. One of your colleagues suggests a 20% off rebate(consumers can mail in their bill and get 20% of the value of their purchase refunded)during the holiday season to increase sales. He estimates that the rebate will increasesales by 10%. You point out that your objective is to maximize profits rather than sales.He suggests that the increase in sales would translate into an increase in profits. Is thereany other information you would want before making a decision on the advisability ofthe proposed rebate offer?Yes, I agree with his point that always increase in sales doesn’t mean increase inprofit for example if a product cost price (C.P) is $8 and the selling price (S.P) is$10 but you give a rebate of 20% which means now the C.P=S.P, so there is noincrease of profit even in case of increase of sales by 10%. But we can try onemore logic that we increase the product S.P by $ 2.5 and give 20% rebate asproposed then we will be getting a profit of $2 as usual and even our sales willincrease by 10% and obviously our profits also increase.
e.Following up on d, you commission your own study and find that your colleaguesestimate was right – the rebate does result in an increase in sales of 10%. Specifically,you selected two markets of approximately 10,000 consumers each and ran advertisingsuggesting the purchase of the product for the holidays in both markets and added therebate offer in one of them. In the market without the rebate offer, 5000 consumerspurchased the product. In the market with the rebate offer, 5500 consumers purchasedthe product and 2000 rebates were claimed. Assuming your product costs $100 and anequal amount is spent on advertising with or without the rebate offer and theadministrative costs of the rebate program are $ 25,000, what are the implications ofthe rebate offer for profitability?As per me there is no option for profitability only as we calculate the costs as per givenquestion, the product sold without rebate are 5000 if it is multiplied with 100 we get itas 5lac and as per question it is also given that only 2000 people took rebate so therecost price will 80* 2000 which will be 1.6lac and remaining people 3500 took for 100which will give 3.5 lac when it is totaled it will be 10.1lac , where the revenue withoutany rebate for 10000 people were going to be 10lac. But again it is said that 25000 wasspent on advertising so we have not got any profit in return we have only lost $15000.
2.Based upon scanner panel data, you have constructed the following switching matrix.a.Evaluate the performance of the three firms A, B and C.b.Assume you are a manager at Firm A. What is your analysis of the situation? Who is thebigger threat, B or C? What ideas would you pursue?Time 1Time 2ABCNone (nopurchase)A433515B580215C5012320None (nopurchase)190405015201550100
c.Assume that after time 2, you instituted two programs. The first was a loyalty programand the second was a program to convert non-users into users of your product. Youtrack the scanner panel data and at time 3, you construct a new switching matrix.Evaluate the two programs and make your recommendations for them.d.Take stock of the situation now after your answer to c above. What ideas would youpursue?Time 2Time 3ABCNoneA1211115B4103320C4010115None096355020202040100
3.Answer the following questions based on the following survey results for soft drinks. Theseresults identifythe salient product attributes and how consumers rate various brands on theseattributes. Assume that e, I and b were measured on 7-point scales ranging from 1 to 7.To receivefull credit, please show all of your work._______________________________________Value (ei)Ideal level (I)Brand Beliefs (bi)AttributeABCD__________________________________________________________High Carbonation672647Quenches Thirst756675Low Price547777Strong Taste245571a.Using the ideal point multi-attribute formulation, compute below the total attitude score for eachbrandandstate which brand is most liked.BrandScoreABCDb.What is the best score a brand could receive?
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