## Pricing/PPC/Basket Analysis

A. Pricing (Use the sheets of price elasticity through optimal pricing)1. Using the ‘price elasticity’ sheet, calculate and interpret the price elasticity when the price increases from $100 to $110. Show the calculation procedure. price demandOld 100 500New 110 350

2. Using the ‘break-even point’ sheet, calculate the break-even point. Explain the calculation procedure.Price (p) $100Unit Cost (c) $60Fixed Cost (F) $10,000

3. Using the ‘Optimal Pricing’ sheet, find the optimal pricing point that maximizes the profit and explain the calculation procedure.

Demand Q=40-PProfit

Cost Unit variable cost (c)=0 and Fixed cost(F)=0

4. Based on the answer of Q3, make a scatter plot with profit (Y-axis) and price (X-axis). Explain the relationship between profit and price.B. Pay per Click

Bidder Bid ($) QS Bid*QS Slot Won (Bid*QS) of Next Bidder PPCA 4 2 B 6 1 C 3 5 D 2 7

5. Calculate the actual payment per click for each bidder.

6. Show the PPC calculation procedure for Bidder A.

7. If a bidder who did not win an ad placement wants to rank first in the auction, how much should he/she bid? (Explain the calculation procedure)

C. Basket AnalysisID meat vegetables fruit1 1 1 02 1 1 13 1 1 04 0 0 05 0 1 16 0 1 17 1 0 08 1 1 19 1 1 010 1 1 0

8. Based on the data table, calculate the relevant numbers in each table in Excel and paste the complete tables.

9. Calculate the lifts for each pair of the products. Show the calculation procedure using one pair (e.g., vegetables and fruit).

10. How can a retailer utilize the basket analysis results? (interpret the lift values to explain