Answered step by step
Verified Expert Solution
Question
1 Approved Answer
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 |
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started