We assume there are two dominant companies in the soft drink industry, “us” and “them.” For this example, we view everything from the point of view of us. We start with a 45% market share. During each...

We assume there are two dominant companies in the soft drink industry, “us” and “them.” For this example, we view everything from the point of view of us. We start with a 45% market share. During each of the next 20 quarters, each company promotes its product to some extent. To make the model simple, we assume that each company promotes at a “regular” level or at a “blitz” level during each quarter. Depending on each company’s promotional behavior in a given quarter, the change in our market share from this quarter to the next is triangularly distributed, with parameters given in Table 12.3. For example, if we blitz and they don’t, then we could lose as much as 1% market share, we could gain as much as 6% market share, and our most likely outcome is an increase of 2% market share. We want to develop a simulation model that allows us to gauge the long-term change in our market share for any pattern of blitzing employed by each company.

Objective To develop a simulation model that allows us to see how our market share changes through time for any pattern of blitzing by the two companies.