A large consumer goods company ran a television advertisement for one of its soap products. On the basis of a survey that was conducted, probabilities were assigned to the following events.
B = individual purchased the product
S = individual recalls seeing the advertisement
B (S = individual purchased the product and recalls seeing the advertisement
The probabilities assigned were P(B) = .20, P(S) = .40, and P(B ( S) = .12.
a. What is the probability of an individual’s purchasing the product given that the individual recalls seeing the advertisement? Does seeing the advertisement increase the probability that the individual will purchase the product? As a decision maker, would you recommend continuing the advertisement (assuming that the cost is reasonable)?
b. Assume that individuals who do not purchase the company’s soap product buy from its competitors. What would be your estimate of the company’s market share? Would you expect that continuing the advertisement will increase the company’s market share? Why or why not?
c. The company also tested another advertisement and assigned it values of P(S) = .30 and P(B ( S) = .10. What is P(B | s) for this other advertisement? Which advertisement seems to have had the bigger effect on customer purchases?

  • CreatedFebruary 16, 2015
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