Answer Happy

1. [20pts] Kellogg conducted a conjoint analysis for the design of a new breakfast cereal. The attributes and attribute levels include: cereal material (corn flakes vs. rice flakes vs. multi-grain), flake size (small vs. large), and texture (crispy vs. soft). The conjoint analysis produced the following part-worth results: Attributed Levela Cereal-materiale corn flakeso rice-flakeso multi-graina Flake-sized smalla larges Textured crispya softa Part-wortha 0.28 0.13a -0.410 0.210 -0.210 0.45a -0.45a t-valued 2.870 1.980 3.750 2.010 2.010 3.240 3.240 Based on the conjoint output above, answer the following questions: (1) What is the total utility of a breakfast cereal that is made of large, crispy, rice flakes? (2) Assume there are three kinds of cereal in the market, Cereal A (rice flakes, large flake size, crispy), Cereal B (corn flakes, small flake size, soft), and Cereal C (multi-grain flakes, small flake size, crispy). Apply the multinomial logit model to forecast the market share of each cereal. Show how you derived the result. Hint: the market share for product option i, which has a utility of u in a market of n products, is as follows: eul Share = eu + eu2 + ... elin