A bottling company launched an advertising campaign to boost sales of its powerKO energy drink for high-performance athletes, hoping to displace consumers from its competitor brand energWater. The number of common consumers of both brands is 500,000 consumers, and each consumer earns an average of 200 pesos a year. The current state of consumer behavior is given by the following matrix:

LIKELIHOOD OF CUSTOMER LOYALTY
	energWater	PowerKO
energWater	0.8	0.2
PowerKO	0.7	0.3

One year after the campaign, the following situation is expected:

LIKELIHOOD OF CUSTOMER LOYALTY
	energWater	PowerKO
energWater	0.6	0.4
PowerKO	0.5	0.5

Required

If the cost of the campaign will be 10 million USD for a year, determine the profitability of carrying out the campaign.

Answer rating: 100% (QA)

Answer Explanation Let X ratio of consumer goes to PKOpower KO ... View the full answer