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    Marketing. Analysis. Exercise

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    attaullahm1732

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    Marketing. Analysis. Exercise

    Uploaded by

    attaullahm1732
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    4 views1 page

    Marketing. Analysis. Exercise

    Uploaded by

    attaullahm1732

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    of 1

    Mauritius Hotel Company (MHC)

    MHC operates in the very competitive hotel and restaurant market in Mauritius. The
    marketing manager forecasts sales for the next 12 months in January of each year.
    These forecasts are used to plan workforce requirements, cash ow requirements and
    inventory levels. She uses quantitative analysis of past sales data and consults a panel
    of lecturers from local universities who are experts in economics and hotel
    management.
    In 2021, the company increased its promotional expenditure with the objective of
    increasing the numbers of foreign tourists using its hotels and local residents using its
    restaurants. Magazine advertising was paid for in exclusive foreign publications. A
    social media campaign was used to promote the restaurants to local residents.
    The sales results for 2020 (before the increased promotional spending) and 2021, after
    both campaigns ended, are shown in Table.
    All values in Promotional Sales 2020 Promotional Sales 2021
    millions spending 2020 spending 2021
    Hotel 1.5 50 3.0 60
    Restaurant 0.8 10 1.0 15
    1- Calculate the promotional elasticities of demand from the data above for both
    hotels and restaurants. [06]
    2- On the basis of these results, do you think the company should change how it
    spends its promotional budget next year? Explain your answer. [08]
    The Daily Times
    The owner of the Daily Times newspaper was concerned about falling sales. He
    believed that newspaper readers are mainly in uenced by price when deciding which
    papers to buy. He therefore cut the price of his paper from $1.50 to $1.20. In the
    following week, sales increased by 150 000 copies to 1 650 000 copies. After four
    weeks, however, sales had fallen back to their original level. The owner was confused
    about the possible reasons for this and wondered whether he should cut the price
    again to $1.00.
    1- From the information given, calculate the PED in the rst week after the price
    reduction. Comment on your result. [03]
    2- Calculate the newspaper’s daily revenue just before and just after the price cut.
    Comment on your results. [03]

    Calculate the following


    1- If the income elasticity of demand is 1.8, what is the impact on demand of an
    increase in income from $20000 to $22000? [02]
    2- If the income elasticity of demand is -0.2 and sales are 5000 units, what is the
    impact of a 4% increase in income. [02]
    3- How does knowledge of Price elasticity of demand, Income elasticity of demand
    and advertisement elasticity of demand help a manager make informed decisions. [06]
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