For the market share model in Problem 5 Chapter 11, suppose that the estimate of
ID: 368021 • Letter: F
Question
For the market share model in Problem 5 Chapter 11, suppose that the estimate of the percentage of new purchasers who will ultimately try the brand is uncertain and assumed to be normally distributed with a mean of 35% and a standard deviation of 4%. Use the NORM.INV function and a one way data table to conduct a Monte Carlo simulation with 25 trials to find the distribution of the long run market share.
For reference, here is problem 5 from chapter 11. Please use the information below to answer the question above.
A company is trying to predict the long-run market share of a new men's deodorant. Based on initial marketing studies, they believe that 35% of new purchasers in the market will ultimately try this brand. They believe that customers will purchase their brand about 60% of the time in the future. Preliminary data also suggest that the brand will attract heavier-than-average buyers, such as those who exercise frequently and participate in sports, and that they will purchase about 20% more than the average buyer.
a. Calculate the long-run market share that the company can anticipate under these assumptions.
b. Develop a general model for predicting long-run market share.
Explanation / Answer
a) Over the long haul every client will be another buyer once.
Let Total number of customer=100
Out of this 100 client 35 will attempt this brand
Client will buy this brand around 40% of time. Out of these 20 %( normal purchasers) will purchase it 15% more than normal purchasers
Subsequently viable number of purchasers=20+20*(1.15)=43%
Out of 35 clients who tries this brand, 43% will be purchase it
Subsequently add up to number of client who will purchase this brand=35*0.43=15.05
Subsequently add up to piece of the pie = 15.05/100=15.05%
b) General model for business sector share=(% of individuals who tries this brand)*(% of individuals who will be rehash buyers)*(% of time these rehash purchasers will purchase this specific brand)