An advertising company has a proposal to make to its customer who wants to launch a...

 

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An advertising company has a proposal to make to its customer who wants to launch a new cosmetic product. The client is motivated by the potential profits. Therefore, the advertising company should evaluate the potential sales that each marketing strategy can generate: Marketing strategy 1: Advertise on the TV. Marketing strategy 2: Advertise in TV and in supermarkets. Marketing strategy 3: Advertise in TV, in supermarkets and via internet. For simplicity, the demand the new cosmetic product is categorized as low, medium, or high. The table below shows how the sales the company will generate (in $) for each option depends on the level of demand in the market. Low sales Medium sales High sales Marketing strategy 1 2 3 - 4 000 - 12 000 -20 000 -8.000 -4000 -12 000 20 000 12 000 4000 It is estimated that if strategy 1 is adopted the probabilities of low, medium, and high demand are 0.4, 0.4 and 0.2, respectively. For strategy 2 the respective probabilities are 0.2, 0.4 and 0.4 while for strategy 3 they are 0.1, 0.2 and 0.7. Determine the marketing strategy that the advertising company should recommend to its client based on expected sales. Draw the decision tree. An advertising company has a proposal to make to its customer who wants to launch a new cosmetic product. The client is motivated by the potential profits. Therefore, the advertising company should evaluate the potential sales that each marketing strategy can generate: Marketing strategy 1: Advertise on the TV. Marketing strategy 2: Advertise in TV and in supermarkets. Marketing strategy 3: Advertise in TV, in supermarkets and via internet. For simplicity, the demand the new cosmetic product is categorized as low, medium, or high. The table below shows how the sales the company will generate (in $) for each option depends on the level of demand in the market. Low sales Medium sales High sales Marketing strategy 1 2 3 - 4 000 - 12 000 -20 000 -8.000 -4000 -12 000 20 000 12 000 4000 It is estimated that if strategy 1 is adopted the probabilities of low, medium, and high demand are 0.4, 0.4 and 0.2, respectively. For strategy 2 the respective probabilities are 0.2, 0.4 and 0.4 while for strategy 3 they are 0.1, 0.2 and 0.7. Determine the marketing strategy that the advertising company should recommend to its client based on expected sales. Draw the decision tree. An advertising company has a proposal to make to its customer who wants to launch a new cosmetic product. The client is motivated by the potential profits. Therefore, the advertising company should evaluate the potential sales that each marketing strategy can generate: Marketing strategy 1: Advertise on the TV. Marketing strategy 2: Advertise in TV and in supermarkets. Marketing strategy 3: Advertise in TV, in supermarkets and via internet. For simplicity, the demand the new cosmetic product is categorized as low, medium, or high. The table below shows how the sales the company will generate (in $) for each option depends on the level of demand in the market. Low sales Medium sales High sales Marketing strategy 1 2 3 - 4 000 - 12 000 -20 000 -8.000 -4000 -12 000 20 000 12 000 4000 It is estimated that if strategy 1 is adopted the probabilities of low, medium, and high demand are 0.4, 0.4 and 0.2, respectively. For strategy 2 the respective probabilities are 0.2, 0.4 and 0.4 while for strategy 3 they are 0.1, 0.2 and 0.7. Determine the marketing strategy that the advertising company should recommend to its client based on expected sales. Draw the decision tree. An advertising company has a proposal to make to its customer who wants to launch a new cosmetic product. The client is motivated by the potential profits. Therefore, the advertising company should evaluate the potential sales that each marketing strategy can generate: Marketing strategy 1: Advertise on the TV. Marketing strategy 2: Advertise in TV and in supermarkets. Marketing strategy 3: Advertise in TV, in supermarkets and via internet. For simplicity, the demand the new cosmetic product is categorized as low, medium, or high. The table below shows how the sales the company will generate (in $) for each option depends on the level of demand in the market. Low sales Medium sales High sales Marketing strategy 1 2 3 - 4 000 - 12 000 -20 000 -8.000 -4000 -12 000 20 000 12 000 4000 It is estimated that if strategy 1 is adopted the probabilities of low, medium, and high demand are 0.4, 0.4 and 0.2, respectively. For strategy 2 the respective probabilities are 0.2, 0.4 and 0.4 while for strategy 3 they are 0.1, 0.2 and 0.7. Determine the marketing strategy that the advertising company should recommend to its client based on expected sales. Draw the decision tree.

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To determine the optimal marketing strategy based on expected sales we can calculate the expected va... View the full answer