The point-and-shoot camera market

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In the early 1990s Fuji Photo Film, USA, joined forces with four of its rivals to create the Advanced Photo System (APS), which is hailed as the first major development in the film industry since 35-millimeter technology was introduced. In February 1996, the new 24-millimeter system, promising clearer and sharper pictures, was launched. By the end of the year, the lack of communications and a limited supply of products made retailers angry and consumers baffled. Advertising was almost nonexistent. Because the product was developed by five industry rivals, the companies had enacted a secrecy agreement in which no one outside of company management, including the company's sales force, would know details about the product until each company introduced its APS products on the same day. When the product was actually introduced, it came with little communication to retailers about the product, virtually no training of sales representatives on the product (so that they could demonstrate and explain the features), and a great underestimation of demand for the product. Fortunately, Fuji pressed on by taking an "honesty is the best policy" stance and explaining to retailers and other customers what had happened and asking for patience. In addition, Fuji increased its research to better ascertain market positioning and size. By 1997, Fuji had geared up production to meet the demand and was increasing customer promotion. APS products were on the road to success. By 1998, APS cameras owned 20% of the point-and-shoot camera market.
Discussion
Suppose you are a part of a Fuji team whose task it is to examine issues about market share, customer acceptance, complaints, and the reasons why new products are successful.
1. A started, by 1998 APS cameras owned 20% of the point-and-shoot camera market. Now it is the year 2003 and the market share might be nearer to 40%. Suppose 30 customers from the point-and-shoot camera market are randomly selected. If the market share is really 40, what is the expected number of point-and-shoot camera customers who purchase an APS camera? What is the probability that six or fewer purchase an APS camera? Suppose you actually got six or fewer APS customers in the sample of 30. Based on the probability just calculated, is this enough evidence to convince you that the market share is not 40%? Why or why not?
2. Suppose customer complaints on the 24-millimeter film are Poisson distributed at an average rate of 2.4 complaints/100,000 rolls sold. Suppose furher that Fuji is having trouble with shipments being late and one batch of 100,000 rolls yields seven complaints form customers. Assuming that it is unacceptable to management for the average rate of complaints to increase, is this enough evidence to convince management that the average rate of complaints has increased, or can it be written off as a random occurrence that happens quite frequently? Produce the Poisson distribution for this question and discuss its implication for this problem.

Reference no: EM13544271

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