Industry demand is expected to increase to 23 million units next year Mr Alger

Industry demand is expected to increase to 23 million

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5.Industry demand is expected to increase to 23 million units next year. Mr. Alger is considering raising his advertising budget to $1 million.a.If the advertising budget is raised, how many units will Brand X have to sell to break even?b.How many units will Brand X have to sell in order for it to achieve the same profit impact that it did this year?c.What will Brand X’s market share have to be next year for its profit impact to be the same as this year?d.What will Brand X’s market share have to be for it to have a $1 million profit impact? MARK 4210 Prof. Eugene R. Raitt Spring 2019 17
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6.Upon reflection, Mr. Alger decides not to increase Brand X’s advertising budget. Instead, he thinks he might give retailers an incentive to promote Brand X by raising their margins from 33% to 40%. The margin increase would be accomplished by lowering the price of the product to retailers. Wholesaler margins would remain at 12%.a.If retailer margins are raised to 40% next year, how many units will Brand X have to sell to break even?b.How many units will Brand X have to sell to achieve the same profit impact next year as it did this year?c.What would Brand X’s market share have to be for its profit impact to remain at this year’s level?d.What would Brand X’s market share have to be for it to generate a profit impact of $350,000? MARK 4210 Prof. Eugene R. Raitt Spring 2019 18
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