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I am stuck - How do I find the trailing values? Delta Airlines Delta Airlines wants to determine the profit-maximizing price to charge for a

I am stuck - How do I find the trailing values?

Delta Airlines

Delta Airlines wants to determine the profit-maximizing price to charge for a 9 a.m. New York to Chicago flight.

The manager also needs to know the following:

  • The brand equity of Delta compared to United and Southwest Airlines.
  • The level of price sensitivity of consumers when choosing from the three flights.

A focus group has been shown five price scenarios.

The Airlinedata.xlsx includes the following information:

  • The five price scenarios.
  • The number of picks for each flight in each scenario.

Question 1.1: Which Airline has more brand equity on this route?

Question 1.2: Are consumers sensitive to the price changes of the three airlines?

Delta Non stop United Nonstop Southwest Nonstop Nothing Delta non Stop United Non stop Southwest Nonstop
25 37 25 12 $500.00 $390.00 $370.00
29 32 26 12 $480.00 $400.00 $360.00
32 29 26 14 $490.00 $430.00 $380.00
29 29 27 16 $510.00 $440.00 $385.00
27 31 27 16 $520.00 $435.00 $390.00
Delta United Southwest None
Brand Equity 0 Maximum Likelihood
Price Sensitivity -694.5334749
Number of Picks Utility Probability of Choice
Price Scenarios Brand A Brand B Brand C Brand A Brand B Brand C None Brand A Brand B Brand C None Brand A Brand B Brand C None Ln(Likelihood)
1 $500.00 $390.00 $370.00 25 37 25 12 0 0 0 0 0.25 0.25 0.25 0.25 -137.2431418
2 $480.00 $400.00 $360.00 29 32 26 12 0 0 0 0 0.25 0.25 0.25 0.25 -137.2431418
3 $490.00 $430.00 $380.00 32 29 26 14 0 0 0 0 0.25 0.25 0.25 0.25 -140.0157305
4 $510.00 $440.00 $385.00 29 29 27 16 0 0 0 0 0.25 0.25 0.25 0.25 -140.0157305
5 $520.00 $435.00 $390.00 27 31 27 16 0 0 0 0 0.25 0.25 0.25 0.25 -140.0157305

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