Red Banjo Brewing is considering launching a sweet beer called “Honey Ale.” They are concerned that their customers may
Posted: Tue Jan 18, 2022 12:58 pm
Red Banjo Brewing is considering launching a sweet beer called
“Honey Ale.” They are concerned that their customers may not accept
the product, as it would be the first locally produced sweet beer.
An initial decision analysis based on available data shows that the
expected monetary value (EMV) of marketing Honey Ale is –$20,000.
The EMV of buying perfect information about the consumer response
is $30,000. A market research company offers to do a study for Red
Banjo for $10,000. Although its information is not perfect, the
sample study should offer some information about the response to
the new brew.
What should Red Banjo’s management do, based on EMV?
Neither buy the research firm’s sample information
nor market Honey Ale.
Buy the research firm’s sample information.
Market Honey Ale instead of buying the research
firm’s sample information.
There is not enough information available to
answer the question.
Cost of imperfect information: $10,000 EMV Buy Perfect Information $30,000 Market Honey Ale ($20,000) Don't Buy Perfect Information Don't Market Honey Ale $0
“Honey Ale.” They are concerned that their customers may not accept
the product, as it would be the first locally produced sweet beer.
An initial decision analysis based on available data shows that the
expected monetary value (EMV) of marketing Honey Ale is –$20,000.
The EMV of buying perfect information about the consumer response
is $30,000. A market research company offers to do a study for Red
Banjo for $10,000. Although its information is not perfect, the
sample study should offer some information about the response to
the new brew.
- Red Banjo Brewing Is Considering Launching A Sweet Beer Called Honey Ale They Are Concerned That Their Customers May 1 (105.68 KiB) Viewed 86 times
Neither buy the research firm’s sample information
nor market Honey Ale.
Buy the research firm’s sample information.
Market Honey Ale instead of buying the research
firm’s sample information.
There is not enough information available to
answer the question.
Cost of imperfect information: $10,000 EMV Buy Perfect Information $30,000 Market Honey Ale ($20,000) Don't Buy Perfect Information Don't Market Honey Ale $0