1 : Firm ABC sells smartphones in emerging markets (e.g., China, Brazil). They a
ID: 375854 • 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.
2) Which attribute is the most important when consumers make the purchase decision? [5 points] Which attribute is the least important when consumers make the purchase decision? [5 points] And why [10 points]
3) ABC decide to launch a holiday promotion program. They have the choice of two alternative programs.
Program 1: lower price from $450 to $300.
Program 2: increase free data plan from 2G to 6G. (for which ABC pays $50/GB to the carrier partner)
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Which program do you think would benefit ABC more? [10 points] And why? [10 points]
4) 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]
5) 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 $550 4 GB 16 GB 32 GB 2 GB 3 GB 6 GB 6 months 1 year 3 years Display Price 2.6 7.9 Storage Free Data Plan -2 WarrantyExplanation / Answer
1. Most preferred level- the level which has the most utility points under each attribute
Display - 5.4"
Price - 300$
Storage - 32GB
Free data plan - 6GB
Warranty - 3 years
2. The most important attribute is the one which has the maximum partworth difference between the levels-
The highest difference is in price i.e of 22 points
The minimum difference is in display size - 5.4 points
3. If the price is reduced from 450$ to 300$, customers gain 8 utility points. The cost to ABC is 450-300 = 150$
If data plan is increased from 2GB to 6GB, customers gain 8 utility points. The cost to company is 4*50 = 200$
Since the numer of utility points is same, ABC would like to decrease price instaed of increasing data plan as decreasing price only costs them 150$ as compared to 200$ when increasing data plan
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