It becomes important for managers to accurately forecast the demand of their product and also understand...

  

Transcribed Image Text:

It becomes important for managers to accurately forecast the demand of their product and also understand as how the demand of other products might affect their own product's demand. In a rapidly growing market like energy drinks, firms need to capture the market scenario quick enough. Firms that fail to keep up the changing pace with the market can lose out to their competitors. Red bull is one of the brands in the energy drink industry. Red bull has estimated the demand of its product by the following function: Q = 12.5 Po1.A2.1y1.3p-1.8 Where, Q = Number of energy drink bottles sold of Red bull Po = Price of red bull energy drink bottle (in $) A = Promotional expenditure yearly in $100 Y = Average income of the consumers per month $100 P = Number of people using the gyms per month The current price for one bottle of Red Bull energy drink $3, promotional expenditure is $600, Average income of consumers is $500 and on an average 100 people are going to gym every month. You are a quantitative analyst and your role is to analyze the below situations in the given scenario. Explain the reason of your analysis done in each below case supporting by calculations. a) Will the revenue of Red Bull decrease, if they increase the price of their bottles? b) How the price of Red Bull energy drink, promotional expenditure and income of the consumers will affect the sales of Red Bull bottles? c) If number of people going to gym increases, does it affect the sales of energy drink bottles? d) How much will be the demand for bottles sold increases, if the income of the consumers increases by x % (x = the last digit of your student id)? e) Will the profit of Red Bull reduce, if they increase the price of their energy drink bottle? f) Do you think Gym subscription can complement the sale of Red Bull energy drink? It becomes important for managers to accurately forecast the demand of their product and also understand as how the demand of other products might affect their own product's demand. In a rapidly growing market like energy drinks, firms need to capture the market scenario quick enough. Firms that fail to keep up the changing pace with the market can lose out to their competitors. Red bull is one of the brands in the energy drink industry. Red bull has estimated the demand of its product by the following function: Q = 12.5 Po1.A2.1y1.3p-1.8 Where, Q = Number of energy drink bottles sold of Red bull Po = Price of red bull energy drink bottle (in $) A = Promotional expenditure yearly in $100 Y = Average income of the consumers per month $100 P = Number of people using the gyms per month The current price for one bottle of Red Bull energy drink $3, promotional expenditure is $600, Average income of consumers is $500 and on an average 100 people are going to gym every month. You are a quantitative analyst and your role is to analyze the below situations in the given scenario. Explain the reason of your analysis done in each below case supporting by calculations. a) Will the revenue of Red Bull decrease, if they increase the price of their bottles? b) How the price of Red Bull energy drink, promotional expenditure and income of the consumers will affect the sales of Red Bull bottles? c) If number of people going to gym increases, does it affect the sales of energy drink bottles? d) How much will be the demand for bottles sold increases, if the income of the consumers increases by x % (x = the last digit of your student id)? e) Will the profit of Red Bull reduce, if they increase the price of their energy drink bottle? f) Do you think Gym subscription can complement the sale of Red Bull energy drink?

Answer rating: 100% (QA)

a The demand function of Red Bull is given as Q125P011A21Y13P18 where Q and P0 represent the quantity or number of red bull energy drink bottles sold and the price of each red bull bottle respectively ... View the full answer