Question 2 Tolkien's marketing manager has been asked to develop a new promotional strategy for the company, which has been facing stiff competition from some new transport companies. After much research she has narrowed down the choice to three strategies and has constructed the decision tree shown below - which includes the payoffs and probabilities she has managed to estimate - but it is incomplete. She has identified three alternative promotional strategies (and their upfront cost): customer referral programme (35,000): causes and charity (30,000); branded gifts (50,000). The impact on turnover in each case depends on the 'reach of the promotional campaigns which could be high, medium or low. The payoffs represent the increase in annual sales turnover in 000s over a one-year period (excluding up- front costs). Required: a) Complete the decision tree by providing the value of all missing elements (shown as A, B, C, D, all marked with a ). (6 marks) Guest b) Use the decision tree to advise the marketing manager on the best option to choose, assuming the company wishes to maximize expected annual sales turnover, net of upfront costs. (4 marks) Question 2 Tolkien's marketing manager has been asked to develop a new promotional strategy for the company, which has been facing stiff competition from some new transport companies. After much research she has narrowed down the choice to three strategies and has constructed the decision tree shown below - which includes the payoffs and probabilities she has managed to estimate - but it is incomplete. She has identified three alternative promotional strategies (and their upfront cost): customer referral programme (35,000): causes and charity (30,000); branded gifts (50,000). The impact on turnover in each case depends on the 'reach of the promotional campaigns which could be high, medium or low. The payoffs represent the increase in annual sales turnover in 000s over a one-year period (excluding up- front costs). Required: a) Complete the decision tree by providing the value of all missing elements (shown as A, B, C, D, all marked with a ). (6 marks) Guest b) Use the decision tree to advise the marketing manager on the best option to choose, assuming the company wishes to maximize expected annual sales turnover, net of upfront costs. (4 marks)