Cash back when the consumer makes an online purchase

Reference no: EM13338397

The product development team from PiggyBank was convinced byyour presentation and has hired you to help them with their creditcard decision. They have focused on three options for their creditcard incentives:

A. cash back when the consumer makes an online purchase;

B. cash back when the consumer makes a purchase at a clothingstore; and

C. entry into a sweepstakes whenever the consumer makes apurchase.

If they choose option C (the sweepstakes entry), they will awarda prize to 1 in 1,000 purchases. Based on the frequency thatconsumers make purchases with their other credit cards, thePiggyBank team estimates that consumers will make an average of 52purchases a year with the new card.

PiggyBank has asked you about the probability of each optionbeing preferred by card holders. They have also asked theprobability of an individual consumer receiving a prize over thecourse of a year. Share your determination of probability in eachof the situations. Explain how these two ways of assessingprobability are different and how they can help make decisions.

Reference no: EM13338397

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