Question

Baldwin's Traditional product Basket finished 2019 with an awareness of 72%. One-third of Basket's existing awareness is lost every year. What is the minimum that Basket s product manager should spend in promotion to earn have an awareness level of 92% at the end of 2020? The first $1million in promotion generates 26% of new awareness, the second million will add 18% more awareness and the third million adds another 5% awareness.

Answer 1

Answer:

they should spend $2 in promotions

Explanation:

Baldwin's Traditional product Basket will lose 1/3 of its 2019 awareness (72%), which will result in only a 48% during 2020. If the product manager wishes to end 2020 with a 92% awareness, they must spend in promotion enough money to raise awareness by 44%.

• The first $1 million spent in promotions will increase awareness by 26%, to a total of 74% (= 48% + 26%).
• The second $1 million spent in promotions will increase awareness by 18%, to a total of 92% (= 74% + 18%).