1 : Firm ABC sells smartphones in emerging markets (e.g., China, Brazil). They a
ID: 376747 • Letter: 1
Question
1: Firm ABC sells smartphones in emerging markets (e.g., China, Brazil). They are seeing intense competition from both high-end and low-end competitors, due to the rapidly changing telecom market. To improve their competitive marketing strategy, they performed a conjoint based analytics exercise. They obtained conjoint data based on a few key smartphone attributes, i.e. display, storage, price, promotional data plan, and warranty length. The conjoint part worth is given to you in Table 1 below. Please answer the following questions, based on the part worth. You will see some negative numbers in the part worth column. Please interpret them in a relative sense. For example, if a product is upgraded to 5.4” display from 4.7”, customers gain 5.4 utility points if all other attributes of the product remain same. If a product’s price increases from $300 to $450, customers lose 8 utility points (11-3=8) if all other attributes of the product remain same.
1. Which program do you think would benefit ABC more? [10 points] And why? [10 points]
2. Please calculate how more dollars consumers are willing to pay if the product is upgraded from 4GB storage to 16 GB storage. Please show the calculation process. [20 points]
3. If consumers make purchase decisions using the share of preference rule, please calculate the market share for the following three products (if we assume these are the only three products in the market). Please show the calculation process. [20 points]
Table 1. Conjoint Partworths Partworth -2 3.4 Attribute Level 4.7" 5.4" $300 $450 $550 4 GB 16 GB 32 GB 2 GB 3 GB 6 GB 6 months 1 year 3 years Display Price 2.6 7.9 Storage Free Data Plan -2 WarrantyExplanation / Answer
The given data with the incremental customer gain in terms of utility points are given as follows:
Based on the given Partworth scores for various options, the best option with maximum gains to the customer are the ones having maximum values.
Therefore answer to the Question 1 is
Display 5.4 inches, Price $300, Storage 32 GB, Free Data Plan of 6GB, and Warranty of 3 years
The above mentioned configuration provides the maximum utility to the customers 38.4 (3.4+11+7.9+11+5.1)
Answer 2
When product is upgraded from 4GB to 16GB the gain is 7.9 (7.9-0)
Price rise from $300 to $450 decrease in gain/ utility is 8 whereas in case of rise from $450 to $550 decrease level is 14, therefore the price of set with 4GB determines the level of price increase to offset the gain of 7.9.
In case the earlier price is $300 then increase in price should (150/8)*7.9, say $148.
In case earlier price is $450 then increase should not be more than $56 based on (100/14)*7.9
Attribute From To Gain Display '" 4.7 5.4 5.4 Price $ 300 450 -8 Price $ 450 550 -14 Storage GB 4 16 2.6 Storage GB 16 32 5.3 Free Data GB 2 3 5 Free Data GB 3 6 3 Warranty year 0.5 1 5 Warranty year 1 3 2.1Related Questions
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