SkeletonSlide7_2010Fall_MGMT324

In fact he feels it is twice as important as either

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In fact, he feels it is twice as important as either breath freshening or cavity prevention. 1) Which brand should Dudley as a utility maximizing individual purchase? Explain. 2) Which attribute change has potentially the biggest impact on Dudley's evaluation of Brand A? Explain. Dudley Doright is in the market for a new tube of toothpaste. Three brands: (A, B and C) are available at the trading post where he shops. His preference for toothpaste is represented by a linear utility function. Three attributes are relevant to his decision (whitening, breath freshening, cavity prevention). On a 1 - 7 scale (7 being the best), the attribute levels of the three brand are as follows: A B C Whitening 6 2 5 Breadth Freshening 6 3 5 Captivity Prevention 1 7 5
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Ideal Point MA Model Inclusion of attributes having an ideal point Attribute 2 has an ideal point ( I 2 ) Example) Sweetness of lemonade, Level of caffeine of coffee More is not always preferred to less Utility Product = W 1 Attr 1 W 2 ( I 2 -Attr 2 ) 2 +…+ W m Attr m The larger distance from the ideal point, the smaller utility
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