Question 2: (25 marks - 45 minutes) Investit Ltd is considering which of the two methods it should use to market its investment services to the public: one is direct mailing and the other is newspaper advertising. It regards these forms of marketing as mutually exclusive. It has a budget for expenditure on marketing of N$200 000. Costs of direct mailing are N$0.25 for each "shot". Previous experience leads the company to expect a response rate of between 6% and 12% with an average of 8%. The chances of the lower, higher and average response rates actually occurring are estimated to be 15%, 20% and 65% respectively. Newspaper advertisements have also been used in the past and these also produce a varying response. Investit's budget would allow it to run a campaign of weekly insertions (i.e.52 in total) in certain suitable Sunday newspapers. Again, based on past experience, it can expect response rates varying between 700 and 2,000 per insertion, with an average of 1,400. The chances of the lower, higher and average response rates actually occurring are 20%, 25% and 55% respectively. In either case, only 40% of the responses can be expected to produce a sale. Each sale generates a net income of N$10. Marks REQUIRED 2.1. On the basis of expected values and standard deviations, recommend on of the marketing plans given that the management of Investit are risk averse. TOTAL MARKS 25 25