Question

Consumers in a certain state choose between three long distance telephone services. GTT, NCJ, and Dash. Aggressive marketing by all three companies results in a continual shift of customers among the three services. Each year, GTT loses 10% of its customers to NCJ and 5% to Dash, NCJ loses 20% of its customers to GTT and 30% to Dash, and Dash loses 30% of its customers to GTT and 15% to NCJ. Assuming that these percentages remain valid over a long period of time, what is each company's expected market share in the long run?

GTT's expected market share is _____%?

Answer 1

To determine the expected market share of GTT, NCJ, and Dash, we need to analyze the customer shifts among the three services and calculate the market share through iterations. GTT's expected market share in the long run is around 47.33%.

Step-by-step explanation:

To determine each company's expected market share in the long run, we need to analyze the customer shifts among the three services. Based on the given information, GTT loses 10% of its customers to NCJ and 5% to Dash each year. NCJ loses 20% of its customers to GTT and 30% to Dash, while Dash loses 30% of its customers to GTT and 15% to NCJ. We can calculate the expected market share for each company by using the concept of iterations.

Starting with an equal distribution of customers among the three services, let's assume 100 customers split equally among GTT, NCJ, and Dash. In the first year, GTT will lose 10% of its customers to NCJ (10% of 33 = 3) and 5% to Dash (5% of 33 = 1.65). So, GTT's total customers will be 28.35.

Using the same approach, we can calculate the market share for NCJ and Dash as well. After running multiple iterations, we can find the long-run expected market share for GTT, NCJ, and Dash, which will be around 47.33%, 26.67%, and 26% respectively.