Business, 13.04.2020 22:32 puchie1225

Management of the New Fangled Softdrink Company believes that the probability of a customer purchasing Red Pop or the company’s major completion, Super Cola, is based on the customer’s most recent purchase. Suppose the following transition probabilities are appropriate: …… 20pts
FROM
TO

Red Pop
Super Cola

Red Pop
0.9
0.1

Super Cola
0.1
0.9

Show the two-period tree diagram for a customer who last purchased Red Pop. What is the probability that this customer purchases Red Pop on the second purchase?
What is the long-run market share for each of these two products?
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 the probability of a customer switching from Super Cola to Red Pop is 0.15. What is the projected effect of the advertising campaign on the market shares?

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