You are in charge of marketing for a new product with only one incumbent competitor. Consumers are familiar with the incumbent product and they value it at $20, whereas consumers have uncertainty about how they should value your product. You can capture this uncertainty by representing the distribution of their valuations by n(18,4) Consumers would buy the product with a higher valuation.
What percentage of the customers would you expect to buy your new product
You came up with a campaign that appeals to all consumers and brings up everyone’s valuation $4 higher. Now the valuation is represented by . How would this change your market share?
Another campaign idea would appeal to younger generation but turn off older generation. The distribution of valuations will be . How would this campaign impact your market share? Which campaign would you run?
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