Score 1 of possible 1 point mark owns all about

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Question 10 of 10 Score: 1 (of possible1 Mark owns "All About Sports", which manufactures NFL, NBA, and college logo merchandise. The sportsmerchandise industry has sales of $70 million. "All About Sports" sales are $14 million with a gross margin $8million. Assume each "share of voice" point costs $275,000. Is it advisable for Mark to pursue four (4) additionalmarket share points?point)A.Yes, because the additional gross margin would be $1.6 million, while the additional marketing expensewould be only $1.1 million.B.No, because the additional marketing expense would be $2.2 million, while the additional gross marginwould be only $1.6 million.C.Yes, because the additional revenues would be $2.8 million, while the additional marketing expensewould be only $2.2 million.D.No, because the additional marketing expense would be $1.65 million, while the additional gross marginwould be only $1.6 million.E.Yes, because the additional revenues would be $2.8 million, while the additional marketing expensewould be only $1.1 million.Answer Key: DFeedback“All About Sports” wants to pursue 4 additional market share points. Due to competitive factors “All AboutSports’ can not simply buy 4 additional market share points at $275,000 apiece. In order to compensate for thiswe apply the “1.5 Rule” from competitive parity budgeting.
1.5 x 4= 6 So in order to gain 4 market share points they will need to spend enough for 6. So they will need to spend …6 x $275,000 = $1.65 million in additional marketing expense This is the cost. In order to calculate the benefit from pursing 4 additional market share points we need to find the gross marginper share point and multiply it by 4. “All About Sports” currently has 20 market share points. Firms Sales / Industry Sales. (14 / 70) = 20% = 20 share points The firm’s gross margin is $8 million therefore the gross margin per share point is $400,000. The benefit topursing 4 additional share points is …

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