Reference no: EM13574833

Q1. Suppose that a survey of shoppers has been performed in an area in order to understand their shopping habits and to determine the share of shoppers that a new store might attract. Three existing stores and one proposed store (described by a written concept statement) were rated by respondents on 4 dimensions: Variety, Quality, Parking, and Value for money. The ratings on these dimensions are:

Store	Variety	Quality	Parking	Value of money
1	0.7	0.5	0.7	0.7
2	0.3	0.4	0.2	0.8
3	0.6	0.8	0.7	0.4
4	0.6	0.4	0.8	0.5
Importance weight	2.0	1.7	1.3	2.2

Calculate the attitudinal market shares for all the stores

1. before Store 4 started

2. after Store 4 started business.

Calculate the changes in market share of stores 1, 2, and 3 in the two cases. How can you explain the changes in shares of stores 1, 2, and 3 with respect to that of store 4?

Q2. Perfam is a manufacturer of fragrances for women.  It currently sells two brands, one called Allure, which is sold to wholesalers for $40, and another called Beauty, which is sold to wholesalers for $20.  It is considering adding a mid-priced brand called Classy for $30.  Perfam's variable costs and prices to wholesalers for six ounce bottles are:

	Allure	Beauty	Classy (new brand)
Unit selling price	$40.00	$20.00	$30.00
Unit variable costs	$20.00	$10.00	$15.00

Perfam expects to sell 10,000 bottles of the new Classy brand, but 5,000 of those sales will be cannibalized from Allure and 1,000 will be cannibalized from Beauty.  Before Perfam considered the new brand, it had expected to sell 11,000 bottles of Allure and 10,000 bottles of Beauty.  Should Perfam launch the new Classy brand?