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?

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?

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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