Project Part 8

304 Words2 Pages
Date: May 25, 2013 To: Lead Economist Laura From: Subject: GE273 Unit 8 Report for Researcher Molly Market researcher Molly needs to select the best advertising strategy for her client Fuse Soda Company. Fuse’s main rival is Frantic Soda, and Molly understands that the effectiveness of Fuse’s advertising depends on how Frantic reacts. If both companies choose to hire a celebrity spokesperson, neither market share, but both experience a 10% increase in profit because the celebrity promotes stronger sales. If only one company hires celebrity, that company enjoys improve market share (a 15% increase) and higher profit. The company that does not hire a celebrity loses market share and experiences a 20% decrease in profit. If neither hires a celebrity, there is no change in market share or profit. I have completed my research and analysis for researcher Molly. My report is provided below. Payoff Matrix Action | Frantic hires celebrity spokesperson. | Frantic does not hire a celebrity spokesperson. | Fuse hires a celebrity spokesperson. | Both firms experience a 10% increase in profit. | Frantic experience a 15% increase in profit. Fuse experiences a 20% decrease in profit | Fuse does not hire a celebrity spokesperson. | Fuse experience a 15% increase in profit. Frantic experiences a 20% decrease in profit. | Neither firm experiences a change in profit. | Fuse assumes that if it raises the price, Frantic will choose the option that gives it the best outcome. Based on the payoff matrix, the best prediction Fuse can make is that Frantic will maintain the same price. Fuse also assumes that id it does not change price, Frantic will choose the best option. The best prediction Fuse can make if that Frantic will maintain the same price. Given these predictions about Frantic’s choice, Fuse chooses the option that gives it the best outcome, which to maintain

More about Project Part 8

Open Document