Movie Money
Studio executives carefully examine how a film performs in its opening weekend in order to determine whether - and how - to invest more in that film. Many decisions, such as increasing number of screens that show the film and expanding the marketing campaign, are best made after reactions can be gathered from the audiences who actually purchase tickets. Therefore, to maximize returns on their marketing investments, studios should release all their films on a small number of screens and with a limited advertising campaign.
The plan to maximize the returns by initially releasing films on only a small number of screens and limiting advertising depends on which of the following assumptions?
(A) Large marketing investments made before opening weekend never eventually yield greater profits than small initial marketing investments.
(B) New advertising techniques, such as web based viral marketing, have not substantially reduced the average marketing costs for films.
(C) A film's prior performance in non-commercial settings, such as festivals, is not well correlated with how general public tends to react to that film.
(D) Across the movie industry, marketing investments do not influence the eventual financial returns of films in predictable ways.
(E) How a film performs in its opening weekend is a strong indicator of the film's financial performance over its lifetime.
The official answer to the question is (A). But I am not convinced by the explanation given in the book "Manhattan's CR Strategy". I am not convinced why option (E) is wrong. I request all CR experts to please explain why options (B) to (E) are wrong and how (A) is the most appropriate answer.
Studio executives carefully examine how a film performs in its opening weekend in order to determine whether - and how - to invest more in that film. Many decisions, such as increasing number of screens that show the film and expanding the marketing campaign, are best made after reactions can be gathered from the audiences who actually purchase tickets. Therefore, to maximize returns on their marketing investments, studios should release all their films on a small number of screens and with a limited advertising campaign.
The plan to maximize the returns by initially releasing films on only a small number of screens and limiting advertising depends on which of the following assumptions?
(A) Large marketing investments made before opening weekend never eventually yield greater profits than small initial marketing investments.
(B) New advertising techniques, such as web based viral marketing, have not substantially reduced the average marketing costs for films.
(C) A film's prior performance in non-commercial settings, such as festivals, is not well correlated with how general public tends to react to that film.
(D) Across the movie industry, marketing investments do not influence the eventual financial returns of films in predictable ways.
(E) How a film performs in its opening weekend is a strong indicator of the film's financial performance over its lifetime.
The official answer to the question is (A). But I am not convinced by the explanation given in the book "Manhattan's CR Strategy". I am not convinced why option (E) is wrong. I request all CR experts to please explain why options (B) to (E) are wrong and how (A) is the most appropriate answer.
Follow your passion, Success as perceived by others shall follow you
