Module 2 – Strategies for Assessing and Increasing Demand Flashcards
A pair of products has a cross-price elasticity of demand of -0.8 and each of the products has an advertising elasticity of demand of about 0.4. Which of the following pairs of products do these metrics most likely describe?
- Peanut butter and jelly
- Wine and wine openers
- Sneakers and sandals
- Water bottles and canteens
Peanut butter and jelly
These products greatly complement each other and would have a negative cross-price elasticity of demand. Both of these products are also typically advertised, but less so than alcohols like wine.
Wine and wine openers
These products complement each other and would have a negative cross-price elasticity of demand. However, because wine is heavily advertised, it would have a much lower AED than 0.4.
Sneakers and sandals
These products are substitutes and would have a positive cross-price elasticity of demand.
Water bottles and canteens
These products are substitutes and would have a positive cross-price elasticity of demand.
Which of the following groups would be most likely to launch an advertising campaign badmouthing its competitors?
- A software company that is certain businesses will prefer its new product to its competitors’ products, once the businesses know that the new product exists
- A single manufacturer that sells the only 3-D printer available in a country
- A coffee chain located near many other coffeehouses and hoping to bring in a greater percentage of the growing number of working professionals in a metropolitan area
- A smartphone operating system developer with a single major competitor
A software company that is certain businesses will prefer its new product to its competitors’ products, once the businesses know that the new product exists
This company would want to run an informational ad campaign to promote its own brand name, rather than badmouth established competitors.
A single manufacturer that sells the only 3-D printer available in a country
A firm that dominates an industry would not need to badmouth competitors, but instead could benefit from advertising the 3-D printer industry as a whole.
A coffee chain located near many other coffeehouses and hoping to bring in a greater percentage of the growing number of working professionals in a metropolitan area
This business will want to focus on differentiating itself positively from its competitors, establishing why new potential customers should choose its product.
A smartphone operating system developer with a single major competitor
This firm would want to advertise to draw attention to the negative aspects of its competitor’s platform and how its own platform differs.
Food2Door is a food delivery service that connects hungry college students to restaurants and fast food establishments (that don’t deliver) via a smartphone application. The company offers its app to students for free and makes money by charging restaurants a reasonable fee for mobile ordering and access to its fleet of delivery drivers. The platform has experienced exponential growth in only a few years.
Which of the following features of the service is most likely responsible for its fast growth?
- Free download for students and relatively low costs of membership for restaurants
- User ratings and reviews of restaurants and items on their menus
- Restaurant recommendations based on previous orders
- A sleek user interface
Free download for students and relatively low costs of membership for restaurants
Both of these policies encourage students and restaurants to use the service. As more and more students download and use the app to order food, more restaurants will want to use the service to deliver orders. In turn, with more restaurants available more and more students will also use the app, creating a virtuous cycle.
User ratings and reviews of restaurants and items on their menus
While this feature is likely to be useful for users, the main value of the application lies in the number and variety of restaurants available to deliver food.
Restaurant recommendations based on previous orders
While this is likely to be useful for users, it’s probably not the main driver of growth.
A sleek user interface
While this is likely to be useful for users, it’s probably not the main driver of growth.
Refer again to the conjoint analysis performed by the sporting goods store below:
Remember that 20% of customers are in Segment A, 20% are in Segment B, 50% are in Segment C and 10% are in Segment D. These customers, 100 in total, will be deciding between the store’s two brands of backpack (either the “gym offering” or the “hiking offering”) and a competing store’s “school offering” bag.
If the sporting goods store were able to bring to market both of its offerings, what modifications to its offerings could the store make to definitely earn more revenues? Select all that apply.
- Add a food pouch to its gym offering
- Decrease the size of its hiking offering from large to medium
- Increase the price of its gym offering
- Add additional pockets to its gym offering.
- Increase the size of its gym offering from small to medium.
Add a food pouch to its gym offering
Adding a food pouch would further satisfy Segment C, allowing the store to drive customers away from its competitor and capture more revenue. However, the addition of the pouch will also steal customers from segment B away from the store’s own higher-priced hiking offering, yielding lower revenues overall.
Decrease the size of its hiking offering from large to medium
This modification would change the level of satisfaction of some segments, but not increase revenue for the store.
Increase the price of its gym offering
While this modification would increase the revenue the store receives on each unit sold, it would also presumably decrease the level of satisfaction each customer received from the product. This would cause Segment C to defect to the store’s competitor, likely decreasing revenues overall.
Add additional pockets to its gym offering.
Adding more pockets would further satisfy Segment C, allowing the store to drive customers away from its competitor and capture more revenue.
Increase the size of its gym offering from small to medium.
While this modification would further satisfy Segments B and D, it would decrease the satisfaction of Segments A and C, causing revenue to fall as customers in Segment C defected to the store’s competitor.
Which of the following statements regarding complements is true? Select all that apply.
- A consumer is willing to pay more to purchase two complementary goods together.
- A decrease in the price of a complementary good will shift the demand curve for a good to the left.
- The cross-price elasticity of demand for two goods that are complements will be negative.
- A firm that wants to increase the demand for its product should make complementary goods as expensive as possible.
- A consumer is less likely to purchase a good if a complement for that good is not available.
A consumer is willing to pay more to purchase two complementary goods together.
By definition, the WTP for two goods that complement each other is higher than the sum of the WTP for each good individually.
A decrease in the price of a complementary good will shift the demand curve for a good to the left.
A decrease in the price of a complementary good will shift the demand curve for a good to the right.
The cross-price elasticity of demand for two goods that are complements will be negative.
A negative cross-price elasticity between two goods implies they are complements.
A firm that wants to increase the demand for its product should make complementary goods as expensive as possible.
The firm should make complements as cheap and widely available as possible.
A consumer is less likely to purchase a good if a complement for that good is not available.
A consumer will be less likely to buy peanut butter if the store does not have jam in stock. Similarly, a consumer is unlikely to purchase a single glove or a single sneaker.
A sporting goods store is trying to decide what type of backpack to introduce into its product line. After performing a conjoint analysis, the store finds that customers generally fall into one of four well-defined customer segments, with average part-worths as shown in the tables below. 20% of customers are in Segment A, 20% are in Segment B, 50% are in Segment C and 10% are in Segment D. These customers, 100 in total, will be deciding between the store’s two brands of backpack (either the “gym offering” or the “hiking offering”) and a competing store’s “school offering” bag.
Which backpack should the store introduce in order to maximize revenues?
- The gym offering
- The hiking offering
- Introducing either offering will yield the same revenues
- Neither product will earn revenue because the competitor’s offering is preferred by all.
The gym offering
If the store introduces the gym offering, it will capture Segment A, but customers in Segment C will be indifferent between its offering and the competitor’s school offering. Assuming the store captures half of Segment C (25% of all consumers), it would capture 45% of all consumers (45 out of 100) paying roughly $30 each, for revenues of about $1,350.00. Even if all of Segment C happened to choose the gym offering, it would still earn slightly more revenue by offering the hiking backpack.
The hiking offering
If the store introduces the hiking offering, it will capture Segments B and D, 30% of all consumers (30 out of 100) paying roughly $70 each, for revenues of about $2,100.00. This would yield the most revenue for the store.
Introducing either offering will yield the same revenues
If the competitor’s product was not on the market, the store would earn approximately the same amount of revenue by offering either of its backpacks. However, because the average consumer in Segment C receives the same utility from purchasing the competitor’s school offering as they do the gym offering, it’s safe to assume that the competitor will attract about half of Segment C. Thus, the store would earn greater revenues by offering its hiking backpack.
Neither product will earn revenue because the competitor’s offering is preferred by all.
The competitor’s product is fully preferred by none of the four segments.
Which of the following is NOT true regarding network effects?
- A business that exhibits network effects may experience exponential growth.
- As a business that exhibits network effects gains market share, buyers should be willing to pay more for their product.
- Network effects exist only for services, and not physical products.
- A market that exhibits network effects is often winner-take-all.
A business that exhibits network effects may experience exponential growth.
As more and more individuals join the network, the business will tend to grow exponentially.
As a business that exhibits network effects gains market share, buyers should be willing to pay more for their product.
The majority of the value of a networked product comes from the fact that others are also using the product. As more and more people join the network, the value of the overall network increases, which causes the market demand curve to shift outwards.
Network effects exist only for services, and not physical products.
False. As the case of Pokémon trading cards shows, physical products can exhibit network effects if the product becomes more valuable as more people have it.
A market that exhibits network effects is often winner-take-all.
In a market with network effects, the firm with the highest market share will tend to become bigger over time, pushing smaller firms out of the market.
You are the Head of Strategy for Sunglass World and your company is considering releasing a new brand of highly protective UV sunglasses. You decide to conduct a conjoint analysis to determine which aspects of sunglasses that consumers value most. The consumers in your analysis are presented with sunglasses with combinations of the following options:
Colors: Black, Brown, Gold, Silver
Shape: Round, Square, Half-Moon
UV Protection: High, Medium, Low
If you ran a survey asking respondents to rank all possible combinations of sunglasses, how many different pairs would the respondents have to rank?
- 10
- 12
- 27
- 36
10
See correct answer for explanation.
12
See correct answer for explanation.
27
See correct answer for explanation.
36
Respondents would have to rank 4*3*3=36 different combinations.
You are the Head of Strategy for Sunglass World and your company is considering releasing a new brand of highly protective UV sunglasses. You decide to conduct a conjoint analysis to determine which aspects of sunglasses that consumers value most. The consumers in your analysis are presented with sunglasses with combinations of the following options:
Colors: Black, Brown, Gold, Silver
Shape: Round, Square, Half-Moon
UV Protection: High, Medium, Low
Bob, one of the survey respondents, prefers each feature of sunglasses in the following order:
Colors: Black>Brown>Gold>Silver
Shape: Round>Half-Moon>Square
UV Protection: Medium>High>Low
Based on these rankings, it’s revealed that Bob’s preferences are consistent with the following part-worths:
Colors: Black:20, Gold:15, Silver:10
Shape: Round:30, Square:15
UV Protection: Medium:10, Low:2
Given these part-worth values, what level of satisfaction could Bob receive from a brown pair of high-UV half-moon sunglasses? Assume that part-worths must be in whole numbers.
- 30
- 32
- 45
- 60
You are the Head of Strategy for Sunglass World and your company is considering releasing a new brand of highly protective UV sunglasses. You decide to conduct a conjoint analysis to determine which aspects of sunglasses that consumers value most. The consumers in your analysis are presented with sunglasses with combinations of the following options:
Colors: Black, Brown, Gold, Silver
Shape: Round, Square, Half-Moon
UV Protection: High, Medium, Low
Bob, one of the survey respondents, prefers each feature of sunglasses in the following order:
Colors: Black>Brown>Gold>Silver
Shape: Round>Half-Moon>Square
UV Protection: Medium>High>Low
Based on these rankings, it’s revealed that Bob’s preferences are consistent with the following part-worths:
Colors: Black:20, Gold:15, Silver:10
Shape: Round:30, Square:15
UV Protection: Medium:10, Low:2
Given these part-worth values, what level of satisfaction could Bob receive from a brown pair of high-UV half-moon sunglasses? Assume that part-worths must be in whole numbers.
- 30
- 32
- 45
- 60
30
Bob gains 32 part-worths for a gold pair of low-UV square sunglasses. Since he prefers brown to gold, half-moon to square, and high-UV to low-UV protection, he would gain at least 35 part-worths for the pair of glasses described.
32
Bob gains 32 part-worths for a gold pair of low-UV square sunglasses. Since he prefers brown to gold, half-moon to square, and high-UV to low-UV protection, he would gain at least 35 part-worths for the pair of glasses described.
45
Bob could gain this level of satisfaction. Based on the rankings above and the part-worth information given, Bob could gain between 35 and 57 part-worths for the pair of glasses described. As more and more features are added to the sunglasses and asked about in the conjoint analysis, the level of satisfaction from any single combination becomes more restricted and a computer program would eventually be needed to determine consistent values.
60
Bob gains 60 part-worths for a black pair of medium-UV round sunglasses. Since he prefers black to brown, round to half-moon, and medium-UV to high-UV protection, he would gain at most 57 part-worths for the pair of glasses described.
The Economics for Managers course content team at HBS Online is trying to determine if there is a relationship between students’ economics backgrounds and their success in the course. The team decides to test this hypothesis by separating its latest cohort into two groups: one group consisting of students that have taken at least one economics course in the past, and the second group consisting of individuals with no prior training in economics. The team sees that students with some previous economics knowledge tend to do 5% better, on average, on Module Quizzes than those without prior exposure.
What conclusion can the E4M content team draw from this knowledge?
Note: The performance data in this question is completely fictional.
- Individuals with prior economics experience are better HBS Online students.
- The more economics courses taken, the better a student will do on an E4M Module Quiz.
- Students with prior experience in Financial Accounting do better on Module Quizzes than those students without experience in FA.
- None of the above.
Individuals with prior economics experience are better HBS Online students.
Despite the correlation between Module Quiz scores and prior exposure to some economics, we cannot draw such a broad-brush conclusion!
The more economics courses taken, the better a student will do on an E4M Module Quiz.
This conclusion answers a different question than the team’s original hypothesis regarding exposure to economics. Namely, it attempts to answer the question, “is there a relationship between the number of economics courses taken by HBS Online students and performance on E4M Module Quizzes?” Since the team only divided students into two groups (some exposure vs. none), it cannot conclude anything about how the number of courses taken impacts quiz scores. Moreover, we don’t know if other missing/hidden variables unrelated to economics exposure could be responsible for the difference between quiz scores between the two groups of students.
Students with prior experience in Financial Accounting do better on Module Quizzes than those students without experience in FA.
While the relationship between experience and quiz scores was observed for economics, we cannot infer causality. Even if we could, there’s no evidence that such a relationship would hold for a completely different subject.
None of the above.
We cannot conclude any of the above. We don’t know if other missing/hidden variables could be responsible for the difference between quiz scores between the two groups of students. For example, students with more prior experience in economics may differ from those with none in other systematic ways (income, gender, type of university attended, etc.).
Your toy company is looking into launching a new line of dolls and action figures but is unsure if kids these days still actually play with them. As part of your market research, you send out a survey to 1000 households that have purchased toys in the last five years. You also decide to run two focus groups: one group of children ages 4-16 and one group of parents.
Which of the following questions asked in a survey or focus group would be unbiased and allow you to gain reliable information? Select all that apply.
- A survey question asking households, “How much money per month do you typically spend on your children’s happiness?”
- A focus group question asking children, “How often per week do you play with dolls or action figures?”
- A survey question asking households, “What fraction/percentage of income do you estimate that your family spends on entertainment in a given month?”
- A focus group question asking parents, “With which types of toys do your children typically play?”
- An anonymous survey question asking children, “what’s your favorite toy and why do you like to play with it?
A survey question asking households, “How much money per month do you typically spend on your children’s happiness?”
This question is too broad and could be biased. For example, some parents will likely overstate the amount they spend on their children to seem like better parents.
A focus group question asking children, “How often per week do you play with dolls or action figures?”
This question could be biased. Younger children are unlikely to be able to estimate the amount of time they spend playing with toys. It might also be the case that children lie about which toys they use and how often.
A survey question asking households, “What fraction/percentage of income do you estimate that your family spends on entertainment in a given month?”
This question seems reasonable and could be useful to estimate potential market size.
A focus group question asking parents, “With which types of toys do your children typically play?”
This question could be biased. Parents that work during the day might not know what kinds of toys that their kids like to play with. It might also be that parents would want their children to play with more educational toys than they actually do.
An anonymous survey question asking children, “what’s your favorite toy and why do you like to play with it?
This question is likely to evoke a truthful response and allow your company see some common features of toys that kids would value.
In what way does randomization help an experimenter to overcome the “missing variables” problem? Select all that apply.
- Randomization helps to account for systematic differences across groups of interest.
- Randomization helps to ensure that the impact measured in a treatment vs. control group is due solely to the variable that is manipulated in the experiment.
- Randomization helps to ensure that the impact on two groups is more or less the same because individuals in either group have an equal chance of receiving the treatment effect.
- Randomization helps to eliminate the adverse effects of sample selection/selection bias.
- Randomization does not help overcome the problem of missing variables, but instead helps deal with confirmation bias.
Randomization helps to account for systematic differences across groups of interest.
Randomization helps control for unobserved variables not being measured in the experiment.
Randomization helps to ensure that the impact measured in a treatment vs. control group is due solely to the variable that is manipulated in the experiment.
Randomization makes it so that the effect of other individual-specific variables, should, on average, cancel out across the treatment and control groups.
Randomization helps to ensure that the impact on two groups is more or less the same because individuals in either group have an equal chance of receiving the treatment effect.
Randomization has nothing to do with the eventual effect of a treatment on those in the group.
Randomization helps to eliminate the adverse effects of sample selection/selection bias.
By randomly creating groups, experimenters can avoid biased samples that may result, for example, when individuals select into groups based on observable differences.
Randomization does not help overcome the problem of missing variables, but instead helps deal with confirmation bias.
This is not true. Confirmation bias involves finding something in an experiment that one expects to find.
An office product manufacturer is thinking of producing some of the office chair options:
(1) a “premium offering” that includes wheels, 360-degree rotation, a lower-back pad, and arm-rests for a high price
(2) a “mobile offering” that includes wheels and 360-degree rotation for a medium price
(3) a “comfort offering” that includes the lower-back pad and armrests for the same medium price
(4) a “basic offering” that includes none of the premium features but has the lowest price.
The manufacturer only has enough resources to produce 3 out of the 4 offerings. How might the office chair manufacturer go about determining which of the chairs to produce?
The features and price points of the four offerings can be seen in the table below:
- Definitely produce the “basic” and “premium” offerings to cater to low-income and high-income customer segments and flip a coin to decide between producing either the “comfort” and “mobile” offerings since they are the same price.
- Definitely produce the “basic” and “premium” offerings to cater to low-income and high-income customer segments and perform a conjoint analysis to decide between producing either the “comfort” and “mobile” offerings.
- Definitely produce the “basic” offering to cater to consumers that want just want a basic office chair and perform a conjoint analysis to decide which two of the other three offerings to produce.
- Perform a conjoint analysis asking about all offerings to decide which types of chairs consumers would prefer the most and would be most profitable to produce.
Definitely produce the “basic” and “premium” offerings to cater to low-income and high-income customer segments and flip a coin to decide between producing either the “comfort” and “mobile” offerings since they are the same price.
There’s no guarantee that consumers will definitely purchase the basic or premium offerings. The company should perform a conjoint analysis including all 4 offerings to see how much consumers value each of the 5 features.
Definitely produce the “basic” and “premium” offerings to cater to low-income and high-income customer segments and perform a conjoint analysis to decide between producing either the “comfort” and “mobile” offerings.
There’s no guarantee that consumers will definitely purchase the basic or premium offerings. The company should perform a conjoint analysis including all 4 offerings to see how much consumers value each of the 5 features.
Definitely produce the “basic” offering to cater to consumers that want just want a basic office chair and perform a conjoint analysis to decide which two of the other three offerings to produce.
There’s no guarantee that consumers will definitely purchase the basic offering. The company should perform a conjoint analysis including all 4 offerings to see how much consumers value each of the 5 features.
Perform a conjoint analysis asking about all offerings to decide which types of chairs consumers would prefer the most and would be most profitable to produce.
The company should perform a conjoint analysis including all 4 offerings to see how much consumers value each of the 5 features. Based on the results, the company can decide which chairs to produce. If it’s the case that price is the most important factor, it might not even make sense to devote resources to producing two more types of chairs.
A supermarket would like to test whether a new brand of soda pop sells significantly more/fewer units than the brand currently on the shelves. Which of the following experiments would best help the store test this hypothesis?
- Place the new brand of soda next to the brand the store currently sells, at the same price, and see if there is a significantly different amount of sales between the two products over a 3-month timeframe.
- Place the new brand of soda next to the checkout counter, at the same price as the current brand, and see how many customers swap the current brand for the new one on the way out.
- Place the new brand of soda in the same shelf location as the current brand, at the same price, remove the original brand, and see if there is a significantly different amount of sales from the 3-month average sales of the original soda.
- Place the new brand of soda next to the brand the store currently sells, at a lower price, and see if there is a significantly different amount of sales between the two.
Place the new brand of soda next to the brand the store currently sells, at the same price, and see if there is a significantly different amount of sales between the two products over a 3-month timeframe.
This setup would likely result in customers buying one soda or the other and would not allow the store to determine whether sales from the new soda would be significantly different than average sales of the original soda over 3 months by itself.
Place the new brand of soda next to the checkout counter, at the same price as the current brand, and see how many customers swap the current brand for the new one on the way out.
The positioning of the new brand at the checkout counter makes it more likely for shoppers to buy this soda, making sales comparisons with the original brand difficult.
Place the new brand of soda in the same shelf location as the current brand, at the same price, remove the original brand, and see if there is a significantly different amount of sales from the 3-month average sales of the original soda.
This is the best setup to test the hypothesis. To compare sales figures between the two brands, the supermarket should change only the type of soda being sold, leaving as many variables as possible (e.g. price, shelf location, amount of other brands sold, length of sales period, etc.) the same.
Place the new brand of soda next to the brand the store currently sells, at a lower price, and see if there is a significantly different amount of sales between the two.
In order to unbiasedly compare sales between the two sodas, the supermarket should ideally charge the same price for both brands.
In which of the following situations would the use of a focus group be preferable to a survey?
- An ice cream shop wants to find out how many people prefer chocolate over vanilla.
- A national movie theater chain wants to see if there is a correlation between income and frequency of going to the movies.
- A coffeehouse is interested in seeing why customers do not like its new French roast.
- A shoe manufacturer would like to investigate which features of tennis shoes that customers value most.
An ice cream shop wants to find out how many people prefer chocolate over vanilla.
A survey would be better to determine the quantity of people that prefer chocolate.
A national movie theater chain wants to see if there is a correlation between income and frequency of going to the movies.
A large sample of individuals would be needed to determine a quantitative correlation between two variables.
A coffeehouse is interested in seeing why customers do not like its new French roast.
This analysis would benefit from more in-depth qualitative information.
A shoe manufacturer would like to investigate which features of tennis shoes that customers value most.
The most beloved features of its product would best be discovered through a conjoint analysis, which is a type of survey design.
A used car salesman is one automobile away from hitting his annual sales quota. Three buyers are interested in purchasing an old sedan—their WTP for the car can be seen in the table below:
Based on the willingness to pay of the potential customers, which sales method will generate the most revenue for the seller?
- An English auction with a bidding increment of $100
- A sealed-bid first-price auction
- A fixed price of $12,000
- All of the above will generate roughly the same revenue.
An English auction with a bidding increment of $100
This method would result in $12,000 or $12,100 in revenue, depending on who submits the final bid. The other two methods would likely result in more revenue.
A sealed-bid first-price auction
It’s unclear how much revenue this type of auction will generate because we cannot be sure how far under their WTP that customers will bid. However, it’s safe to assume that it will yield revenue as high as or higher than the second highest WTP.
A fixed price of $12,000
See correct explanation.
All of the above will generate roughly the same revenue.
With so few bidders, the sealed-bid first-price auction could generate more or less revenue than the other two methods. As a rule of thumb, however, each of the above methods will generate approximately the same revenues for the seller.
A home electronics store is trying to decide what TV to introduce into its product line. After performing a conjoint analysis, the store finds that customers generally fall into one of three well-defined customer segments, with average part-worths as shown in the tables below. 25% of customers are in Segment A, 40% are in Segment B, and 35% are in Segment C. These customers will be deciding between the store’s TV (either the “quality offering” or the “size offering”) and a competing store’s product. Which TV should the store introduce in order to maximize revenues?
- The quality offering.
- The size offering.
- Revenues will be the same no matter which TV is introduced.
The quality offering.
Segment C will purchase the TV no matter what. Segment B, which will purchase from the competitor unless the quality offering is introduced, contains more customers than segment A, which will purchase from the competitor unless the size offering is introduced.
The size offering.
Although segments A and C both prefer the size offering, customers in segment C prefer either offering to the competing TV, and should be left out of the analysis.
Revenues will be the same no matter which TV is introduced.
Customers in segment C will purchase whichever TV is offered, but purchases by customers in segments A and B are dependent on which TV is offered. Notice that the three segments do not contain equal numbers of customers.
The home electronic store conducts a similar conjoint analysis in another country, where customer preferences are different. In this country, customers fall into one of two well-defined and equal-sized segments, with average part-worths as shown below in the table. Again, customers will be deciding between the store’s TV (either the “quality offering” or the “size offering”) and a competing store’s product. Which TV should the store introduce in order to maximize revenues?
- The quality offering.
- The size offering.
- Revenues will be the same no matter which TV is introduced.
The quality offering.
Neither customer segment prefers the quality offering, and neither segment will change its behavior based on which TV is offered anyway.
The size offering.
Although both customer segments prefer the size offering, neither will change their decision based on which TV is offered.
Revenues will be the same no matter which TV is introduced.
Customers in segment A will purchase the TV no matter which one is introduced. Customers in segment B will always choose the competing TV. Since the TVs are offered for the same price, either TV will bring in the same revenue.
A product manager is trying to determine customers’ preferences for phone features. The manager has identified 4 relevant product features, and a range of possible settings for these features, as shown in the table below. If the product manager ran a survey asking respondents to rank all possible combinations of features, how many different alternatives would the respondents have to rank?
Number:
144
There are 4*4*3*3 possible combinations of features. For example, if you look only at phones with 4MP cameras, 16GB of storage, and a price of $100, there are four possible phones—one with each screensize.
