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Cpa Section Iv Question Paper
Cpa Section Iv
Course:Cpa Part Ii
Institution: Pinnacle Business School question papers
Exam Year:2011
Quantitative Analysis
Matrix Algebra
Question 1
Two tv stations Channel 1 (C1) and Channel 2 (C2) compete for viewers. Of those who they C1 on a given day, 40% view C2 the next day. In the case of those who view C2 on a given day, 30% switch over to C1 the next day. Suppose yesterday, of the total viewers 60% viewed C1 and the rest C2, determine the percentage of viewers for each station:
i. Today
ii. Tomorrow
iii. In the long run (equilibrium/steady state)
Question 2
Ariel is a new washing detergent recently introduced into the market. The company marketing Ariel has started and aggressive campaign and the results are such that, among the people who buy Ariel detergent in a given week, 70% continue to buy it the following week; of those buying any other detergents in a given week, 35% are won over to Ariel the following week.
Required
Find the fraction or percentage of Ariel buyers that will be buying Ariel in the long run
Question 3
In considering her future market strategy, Mama Saidi notes that her own customers are quite loyal; 80% being repeat customers. Bwana Shida, the competitor holds 70% of his customers. The advertising manager of Mama Saidi believes that they have two advertising strategies: customer loyalty to their brand could be raised to 85% or they could increase switching to their brand to 35%
In either case, the advertising campaign would cost Shs. 2,500,000 and would bring in Shs. 1,250,000 as profits, for each percentage point increase in market share.
Required
a. What is Mama Saidi's market share before the commencement of the advertising campaign?
b. Which advertising strategy would give the greatest boost in market share?
c. Discuss the limitations of the above analysis
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