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Credibility is often the most effective feature of an advertising campaign Suppose that, for a particular advertisement 32% of people surveyed currently believe what the ad claims A marketing

Credibility is often the most effective feature of an advertising campaign. Suppose that, for a particular advertisement, 32% of people surveyed currently believe what the ad claims. A marketing manager believes that for each 1-point increase in that percentage, annual sales will increase by $1 million. For each 1-point decrease, annual sales will decrease by $1 million. The manager believes that a change in the advertising approach can influence the ad’s credibility. The probability distribution of the potential percentage changes is listed here. Percentage Change Probability -2 .1 -1 .1 0 .2 +1 .3 +2 .3 If for each dollar of sales the profit contribution is 10 cents and the overall cost of changing the ad is $58,000, should the ad be changed?

Jun 22 2020 View more View Less

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