Management of the New-Fangled Soft Drink Company believes that the probability of a customer purchasing Red Pop or the company's major competition, Super Cola, is based on the customer's most recent purchase. Suppose that the following transition probabilities are appropriate: From Red Pop Super Cola Red Pop 0.9 0.1 To Super Cola 0.1 0.9 a. Show the two-period tree diagram for a customer who last purchased Red Pop. b. What is the probability that this customer purchases Red Pop on the second purchase? c. What is the long-run market share for each of these two products?
Management of the New-Fangled Soft Drink Company believes that the probability of a customer purchasing Red Pop or the company's major competition, Super Cola, is based on the customer's most recent purchase. Suppose that the following transition probabilities are appropriate: From Red Pop Super Cola Red Pop 0.9 0.1 To Super Cola 0.1 0.9 a. Show the two-period tree diagram for a customer who last purchased Red Pop. b. What is the probability that this customer purchases Red Pop on the second purchase? c. What is the long-run market share for each of these two products?
College Algebra
7th Edition
ISBN:9781305115545
Author:James Stewart, Lothar Redlin, Saleem Watson
Publisher:James Stewart, Lothar Redlin, Saleem Watson
Chapter9: Counting And Probability
Section9.3: Binomial Probability
Problem 2E: If a binomial experiment has probability p success, then the probability of failure is...
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a. Show the two-period tree diagram for a customer who last purchased Red Pop.
b. What is the probability that this customer purchases Red Pop on the second purchase?
c. What is the long-run market share for each of these two products?
d. A Red Pop advertising campaign is being plannedt o increase the probability of attracting Super Cola customers. Management believes that the new campaign will increase to 0.15 the probability of a customer switching from Super Cola to Red Pop. What is the projected effect of the advertising campaign on the market shares?
Transcribed Image Text:Management of the New-Fangled Soft Drink Company believes that the probability of a
customer purchasing Red Pop or the company's major competition, Super Cola, is based on
the customer's most recent purchase. Suppose that the following transition probabilities are
appropriate:
From
Red Pop
Super Cola
Red Pop
0.9
0.1
To
Super Cola
0.1
0.9
a. Show the two-period tree diagram for a customer who last purchased Red
Pop.
b. What is the probability that this customer purchases Red Pop on the second
purchase?
c. What is the long-run market share for each of these two products?
d. A Red Pop advertising campaign is being planned to increase the probability
of attracting Super Cola customers. Management believes that the new
campaign will increase to 0.15 the probability of a customer switching from
Super Cola to Red Pop. What is the projected effect of the advertising
campaign on the market shares?
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