Questions
Q1) Pritti Sprays is a manufacturer of cosmetic products. Its management is
currently engaged in an analysis of the lipsticks produced by the firm, examining
the future demand for them. Market research indicates that advertising
expenditure, price and average income are three major variables affecting the
demand for the lipsticks. The advertising elasticity for demand is estimated to be
1.5, the price elasticity -1.2 and the income elasticity 1.8. In addition, the
following data are available. a. Estimate sales for 2014 and 2015.
b. A competitor plans on reducing its price from $6.90 to $6.40 in 2016;
assuming the CED is 1.5, how much would Pritti have to spend on advertising to
achieve the same rate of growth of sales as from 2014 to 2015? Q2) from 2000 until 2014, a total of 550,000 workers were involved in the
automotive industry, one of the main contributors to the national revenue and
the economy. “In 2014 alone, some 21,000 people were involved in the
automotive industry and about 180,000 workers more are needed until
2020.The industry produced a total 614,664 vehicles including 563,883 PVs and
50,781 commercial vehicles (CVs) in 2015. About 250,000 imported cars were
sold in Malaysia at the same period. A heavy import Duties and Excise tax were
imposed on imported vehicles into Malaysia resulting in imported cars making
imported cars about 15 – 40% more expensive compared to the neighboring
countries’ and USA.The government rationalize the protectionist policy as a
measure to protect the labor market and the economy as a whole.
Question:
Rationalize how imposing high duty on imported vehicle can stabilize the Labor
market and the economy as a whole in Malaysia? Q3) a retail departmental stores company got an enormous boost 10 years ago
when it spotted a gap in the food market, and started selling fancy convenience foods. Its success in this area capitalized on the fact that, compared with
clothes, food generates high revenues per square meter of floor space. While
food takes up 15% of the floor space in the company’s stores, it accounts for
around 40% of sales. But the company gradually lost its advantage as
mainstream food chains copied its formula. The company’s share of the
Malaysian grocery market is under 3% and falling, compared with around 18%
for its biggest supermarket rival, Tesco.
Question:
Identify the main factors that influence the retail departmental stores demand
for their products and what are the weaknesses and threat of their demand
relating to controllable and uncontrollable factors. Q4) Shah Alam Enterprises sells mobile phones, currently charging $800 and
earning $96,000 per week. It is considering a price cut of 20 per cent to increase
its market share, estimating its PED to be 1.6. a. Estimate the effect of the price cut on Shah Alam Enterprise’s revenue,
stating any assumptions.
b. Ifacompetitorrespondstothepricecutbyalsoreducingitspriceby20 per cent,
estimate the effect on Shah Alam Enterprises’ revenue, assuming the CED is 0.8.
c. Compare the profits in (a) and (b) above with the original level of profit. Q5) Estimates of income Elasticities for all the common products and services
are as follows: Required :
Classify the products and services above by type - luxury, staple and inferior
based on the Income elasticity of demand.
How do you plan the strategies in marketing all the above products.

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Status NEW Posted 22 Jun 2017 01:06 AM My Price 7.00

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