Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Question 15 (7 pts). The market for a cosmetic product is divided between two competitors, Alpha and Beta. Suppose that Alpha and Beta start by

Question 15 (7 pts). The market for a cosmetic product is divided between two competitors, Alpha and Beta. Suppose that Alpha and Beta start by sharing the market equally, i.e. they each initially hold 50% of the market share. Analysts predict that, each year, 30% of Alpha customers will switch to Beta, and 20% of Beta customers will switch to Alpha.

(a) (1 pt) What is the migration (or stochastic or transition) matrix P for this problem?

(b) (1 pt) Determine the market shares of Alpha and Beta after one year, according to the forecasts of the Analysts.

(c) (5 pts) Let's assume that Alpha and Beta do not change their marketing strategies and that the migration between the two competitors remains the same. What will be the long-term market shares?

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Cost Accounting A Managerial Emphasis

Authors: Charles T. Horngren, Srikant M.Dater, George Foster, Madhav

13th Edition

8120335643, 136126634, 978-0136126638

More Books

Students also viewed these Accounting questions