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Updated on: 29 Oct 2023, 03:54
Originally posted by Sajjad1994 on 10 Mar 2022, 08:00.
Last edited by BottomJee on 29 Oct 2023, 03:54, edited 2 times in total.
Last edited by BottomJee on 29 Oct 2023, 03:54, edited 2 times in total.
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Marketers theorize that consumers’ purchase decisions are driven by the perception of value. This perception, often obtained through a cost-benefit analysis, can be manipulated by adding more features or by reducing the price. This is called the expectancy-value model. Let’s see an example.
Jack, who wants to purchase a laptop, has narrowed down his choices to 4 brands of laptop computers (A, B, C, D). He 1s interested in 5 attributes: Processor Performance (PP), Graphics Capability (GC), Size & Weight (SW), Battery life (BL), & Marked Price (MP) and is evaluating the offerings based on the same. Jack puts 30% priority on Processor Performance, 10% on Graphic Capability, and equal priority on Size & Weight, Battery life, and Price. He comes up with a number called Composite Attribute Value that is the weighted average of the performance of a brand’s offering against Jack’s priorities.
Each attribute is rated from 0 to 10, where 10 represents the highest performance.
Jack, who wants to purchase a laptop, has narrowed down his choices to 4 brands of laptop computers (A, B, C, D). He 1s interested in 5 attributes: Processor Performance (PP), Graphics Capability (GC), Size & Weight (SW), Battery life (BL), & Marked Price (MP) and is evaluating the offerings based on the same. Jack puts 30% priority on Processor Performance, 10% on Graphic Capability, and equal priority on Size & Weight, Battery life, and Price. He comes up with a number called Composite Attribute Value that is the weighted average of the performance of a brand’s offering against Jack’s priorities.
Each attribute is rated from 0 to 10, where 10 represents the highest performance.
Composite Attribute Value for Jack is greatest for brand A.: No
Jack purchase brand A based on customer value.: Yes
Brand C scores lowest both in terms of customer value and Customer benefit.: Yes
Be sure to select an answer first to save it in the Error Log before revealing the correct answer (OA)!
Difficulty:
95%
(hard)
Question Stats:
39% (04:46) correct
61%
(03:46)
wrong
based on 607
sessions
History
Date
Time
Result
Not Attempted Yet
1. Consider each of the information given in tabs. Does the information in three tabs support the inference as stated below?
| Yes | No | |
| Composite Attribute Value for Jack is greatest for brand A. | ||
| Jack purchase brand A based on customer value. | ||
| Brand C scores lowest both in terms of customer value and Customer benefit. |
ShowHide Answer
Official Answer
Composite Attribute Value for Jack is greatest for brand A.: No
Jack purchase brand A based on customer value.: Yes
Brand C scores lowest both in terms of customer value and Customer benefit.: Yes
\(X=\frac{Y(Z-5)}{5}\)
Be sure to select an answer first to save it in the Error Log before revealing the correct answer (OA)!
Difficulty:
15%
(low)
Question Stats:
77% (01:29) correct
23%
(01:30)
wrong
based on 615
sessions
History
Date
Time
Result
Not Attempted Yet
2. Let X denote Customer Value, Y denote Customer Cost, and let Z denote Composite Attribute Value. Which of the following algebraic expressions represents relationship among X, Y & Z?
| \(X=\frac{Y(Z-5)}{5}\) | |
| \(X=\frac{4}{5*Y*Z}\) | |
| \(X=\frac{Y(5-Z)}{5}\) | |
| \(X=\frac{Y}{5(5-Z)}\) | |
| \(X=\frac{YZ-5Z}{5}\) |
ShowHide Answer
Official Answer
\(X=\frac{Y(Z-5)}{5}\)
Reduce the marked price to $60.: No
Add a faster processor to increases its Processor Performance rating to 9.: Yes
Improve its graphics capability to the highest possible ranking.: Yes
Be sure to select an answer first to save it in the Error Log before revealing the correct answer (OA)!
Difficulty:
75%
(hard)
Question Stats:
48% (01:49) correct
52%
(01:38)
wrong
based on 658
sessions
History
Date
Time
Result
Not Attempted Yet
3. If Jack will decide buying laptop based on Customer Value, which of the possible strategies should company C implement so that it becomes Jack’s preferred choice?
| Yes | No | |
| Reduce the marked price to $60. | ||
| Add a faster processor to increases its Processor Performance rating to 9. | ||
| Improve its graphics capability to the highest possible ranking. |
ShowHide Answer
Official Answer
Reduce the marked price to $60.: No
Add a faster processor to increases its Processor Performance rating to 9.: Yes
Improve its graphics capability to the highest possible ranking.: Yes
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15 Jun 2024, 00:46
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Given - Jack, who wants to purchase a laptop, has narrowed down his choices to 4 brands of laptop computers (A, B, C, D). He 1s interested in 5 attributes: Processor Performance (PP), Graphics Capability (GC), Size & Weight (SW), Battery life (BL), & Marked Price (MP) and is evaluating the offerings based on the same. Jack puts 30% priority on Processor Performance, 10% on Graphic Capability, and equal priority on Size & Weight, Battery life, and Price. He comes up with a number called Composite Attribute Value that is the weighted average of the performance of a brand’s offering against Jack’s priorities.
Lets create a table using the priority as he given.
Brand PP GC SW BL MP applying priority --> PP(30%) GC(10%) SW(20%) BL(20%) MP(20%) CCAV
A 8 6 4 4 8 -------------------> 2.4 0.6 0.8 0.8 1.6 6.2
B 6 9 6 4 6 -------------------> 1.8 0.9 1.2 0.8 1.2 5.9
C 5 4 9 7 4 -------------------> 1.5 0.4 1.8 1.4 0.8 5.9
D 7 8 4 6 7 -------------------> 2.1 0.8 0.8 1.2 1.4 6.3
Hence,
1. Composite Attribute Value for Jack is greatest for brand A. --- No. (Highest value is for brand D)
2. Jack purchase brand A based on customer value.
For this lets calculate Customer value for each brand,
But before that we need to calculate CB - Customer benefit = CC * CCAV / 5
CBforA = CCforA * CCAV / 5 = 150*6.2 / 5 = 186
Similarly CBforB = 139*5.9/5 = 164.02, CBforC = 127*5.9/5 = 149.86 and CBforD = 122*6.3/5 = 153.72
From this we will calculate Customer value
CVforA = CBforA - CCforA = 186 - 150 = 36
CVforB = CBforB - CCforB = 164.02 - 139 = 25.02
CVforC = CBforC - CCforC = 149.86 - 127 = 22.86
CVforD = CBforD - CCforD = 153.72 - 122 = 31.72
As CV is high for A Therefore, Jack purchase brand A based on customer value - Yes.
3. Brand C scores lowest both in terms of customer value and Customer benefit. - Yes
4. Let X denote Customer Value, Y denote Customer Cost, and let Z denote Composite Attribute Value. Which of the following algebraic expressions represents relationship among X, Y & Z
This one was straight forward Option A - X = (Y*Z/5) - Y = Y*(Z/5 - 1)
X = Y*((Z-5)/5)
5. If Jack will decide buying laptop based on Customer Value, which of the possible strategies should company C implement so that it becomes Jack’s preferred choice?
For this we will need some observation check
i. Reduce the marked price to $60. - This doesn't going to impact on Customer Value it will still remain same. Hence No.
ii. Add a faster processor to increases its Processor Performance rating to 9. - This will impact on CCAV, Value will increase by +1.2 also, it will increase value of CV. Hence Yes.
iii. Improve its graphics capability to the highest possible ranking. - Maximum possible ranking is 10 this will impact on CCAV, Value will increase by +0.6 also, it will increase value of CV. Hence Yes.
Lets create a table using the priority as he given.
Brand PP GC SW BL MP applying priority --> PP(30%) GC(10%) SW(20%) BL(20%) MP(20%) CCAV
A 8 6 4 4 8 -------------------> 2.4 0.6 0.8 0.8 1.6 6.2
B 6 9 6 4 6 -------------------> 1.8 0.9 1.2 0.8 1.2 5.9
C 5 4 9 7 4 -------------------> 1.5 0.4 1.8 1.4 0.8 5.9
D 7 8 4 6 7 -------------------> 2.1 0.8 0.8 1.2 1.4 6.3
Hence,
1. Composite Attribute Value for Jack is greatest for brand A. --- No. (Highest value is for brand D)
2. Jack purchase brand A based on customer value.
For this lets calculate Customer value for each brand,
But before that we need to calculate CB - Customer benefit = CC * CCAV / 5
CBforA = CCforA * CCAV / 5 = 150*6.2 / 5 = 186
Similarly CBforB = 139*5.9/5 = 164.02, CBforC = 127*5.9/5 = 149.86 and CBforD = 122*6.3/5 = 153.72
From this we will calculate Customer value
CVforA = CBforA - CCforA = 186 - 150 = 36
CVforB = CBforB - CCforB = 164.02 - 139 = 25.02
CVforC = CBforC - CCforC = 149.86 - 127 = 22.86
CVforD = CBforD - CCforD = 153.72 - 122 = 31.72
As CV is high for A Therefore, Jack purchase brand A based on customer value - Yes.
3. Brand C scores lowest both in terms of customer value and Customer benefit. - Yes
4. Let X denote Customer Value, Y denote Customer Cost, and let Z denote Composite Attribute Value. Which of the following algebraic expressions represents relationship among X, Y & Z
This one was straight forward Option A - X = (Y*Z/5) - Y = Y*(Z/5 - 1)
X = Y*((Z-5)/5)
5. If Jack will decide buying laptop based on Customer Value, which of the possible strategies should company C implement so that it becomes Jack’s preferred choice?
For this we will need some observation check
i. Reduce the marked price to $60. - This doesn't going to impact on Customer Value it will still remain same. Hence No.
ii. Add a faster processor to increases its Processor Performance rating to 9. - This will impact on CCAV, Value will increase by +1.2 also, it will increase value of CV. Hence Yes.
iii. Improve its graphics capability to the highest possible ranking. - Maximum possible ranking is 10 this will impact on CCAV, Value will increase by +0.6 also, it will increase value of CV. Hence Yes.
15 Jun 2024, 00:53
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I think the first question itself serves as a hint that certain calculations are necessary to answer questions quickly:
Spending a few minutes to construct the table is essential:
A) From the First tab, we can compute the Composite Attribute Value for each of the Brands:
Composite Attribute Value (CAV)= [(Weight of Attribute 1*Ranking of Attribute 1)+(Weight of Attribute 2*Ranking of Attribute 2)+(Weight of Attribute 3*Ranking of Attribute 3)+(Weight of Attribute 4*Ranking of Attribute 4)+(Weight of Attribute 5*Ranking of Attribute 5)]/Total Weight
Note: The total weight (here) would be 1 (0.3+0.1+0.2+0.2+0.2)
B) We can calculate the Customer Benefit and Customer Value using the following formulas
Customer Benefit= Customer Cost* CAV/5 (per the second tab)
Customer Value= Customer Benefit- Customer Cost (per the second tab)
Now, I believe the questions should be a breeze to answer.
GMAT-Club-Forum-xkb988ks.png [ 19.88 KiB | Viewed 3447 times ]
GMAT-Club-Forum-6lvw2p25.png [ 8.08 KiB | Viewed 3426 times ]
Spending a few minutes to construct the table is essential:
A) From the First tab, we can compute the Composite Attribute Value for each of the Brands:
Composite Attribute Value (CAV)= [(Weight of Attribute 1*Ranking of Attribute 1)+(Weight of Attribute 2*Ranking of Attribute 2)+(Weight of Attribute 3*Ranking of Attribute 3)+(Weight of Attribute 4*Ranking of Attribute 4)+(Weight of Attribute 5*Ranking of Attribute 5)]/Total Weight
Note: The total weight (here) would be 1 (0.3+0.1+0.2+0.2+0.2)
B) We can calculate the Customer Benefit and Customer Value using the following formulas
Customer Benefit= Customer Cost* CAV/5 (per the second tab)
Customer Value= Customer Benefit- Customer Cost (per the second tab)
Now, I believe the questions should be a breeze to answer.
Attachment:
GMAT-Club-Forum-xkb988ks.png [ 19.88 KiB | Viewed 3447 times ]
Attachment:
GMAT-Club-Forum-6lvw2p25.png [ 8.08 KiB | Viewed 3426 times ]
15 Jun 2024, 03:04
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Why will reducing $60 not impact? customer value is calculated by subtracting customer benefit from customercost
hence if MP is reduced to 60 from 80, customer cost will reduce, inturn, increasing the customer value.
someone pls tell where am i going wrong
hence if MP is reduced to 60 from 80, customer cost will reduce, inturn, increasing the customer value.
someone pls tell where am i going wrong
Purnank
