It is reported that there has been an increasing adoption of the marketing concept by companies worldwide. MTN Zambia is such a one company which has not only adopted the concept but has been innovative in the mobile telecommunication service industry. The company now would like to introduce a new service - Talk4Mahala One4One – where customers will be charged for the first minute, and talk at no charge the next minute. The likelihood of the introduction of this service being a success is 0.6 and will result into a profit potential of 4million ZMK. However if the service fails the company will lose 2.5 million ZMK. The company has done a concept test to evaluate the new service where a group of customers are asked to discuss the concept. The results of this test are either positive or negative. Those that have worked with the concept test several times before believe that for successful services the concept test is positive 80% of the time. However, for the failed services, the concept test is believed to be negative 60% of the time. The company doing the concept testing will charge 200,000 ZMK.
MTN now needs to know whether to introduce the service or not and the value of perfect information.
REQUIRED:
a. Calculate the value of perfect information?
b. Advise whether the company should introduce the service given a positive concept test or a negative concept test.
c. What is the significance of the value of research information?