Katharina Wiekeiser is the new intern at Sophos, a beauty care company. She has to allocate the marketing budget for the international shampoo brand Pure Muenster to four regions: Asia, USA, Europe and rest of the world. She still knows from her studies on marketing operations that budget allocations should be influenced by the budget elasticities in theses respective regions. Katharina's boss provides her with an allocation scheme from the last period. Unfortunately these schemes are not complete - she only gets information about the allocation of budgets proportional to the absolute profit contribution (PPC) and the allocation according to the rule of almost optimal allocation (AOA;). Furthermore, Katharina knows that the sum of profit contribution (PC;) in all regions is E 561 million and the sum of weights for the almost optimal budget allocation (G) equals E 122 million. PPC: (in E million) AOA (in E million) Asia 47 21.7 USA 54.54 125.5 Europe 68.3 125.7 Rest of the World 190.38 87.32 a) Please calculate the elasticities for all four regions using the information given in the text and table. (8 points) Katharina's boss is under high time pressure and therefore uses the percentages-of-revenues rule to determine the advertising budget as well as the price for the product Pure Muenster XL. Katharina knows about the shortfalls of this rule and wants to set a new price and a new advertising budget which are optimal in the short run. Katharina knows that variable costs are E 21 per unit sold, but she does not know about the price and the advertising elasticities of this product. Hence, she decides to use analogies from testmarkets of similar products where prices and advertising spendings have been systematically varied ceteris paribus. Year Year Year Year Testmarket A Testmarket B 2011 2012 2011 2012 Price (E) 22 20.24 Advertising spending (E) 450,000 540,000 Sales (Units) 200,000 240,000 Sales (Units 36,000 41,040 One year later, Katharina looks back and is very pleased that her revenue forecast of E 1 million has exactly been realized