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8.Which distribution channel is projected to be more profitable?
9.As Ger and Chemel, perform whatever analysis and make whatever recommendations you deem necessary. It is evident that the online sales method is the better of the two options. The net incomes offered by the online sales (Figure 3.1) far outperform the potential net incomes of the trade show method. For example, the net income offered by 5% of ad clicks leading to purchases is $151,263.76 higher than net income offered by the most optimistic trade show order volume. The order volume in online purchases has the ability to be significantly higher, since the business is no longer restricted to operations in North America and can sell globally. However, an area of possible improvement is the high cost of ad placement online. A single ad click will cost $1.05, and there is at most a 5% chance that the $1.05 spent on the ad will actually result in a purchase. However, it is recommended that the company attempts any possible method to reduce the cost per click in order to make the online advertising investment less costly and risky. Introducing another product line may help the company meet the needs of the wider customer base they now have access to; for example, a line of rings or bracelets may cater to more potential customers. The possible new product line should be created with the same cost-effective manufacturing approach that Foxy has been utilizing successfully. Foxy Originals should maintain their successful online operations and cease attending trade shows altogether. In addition to the business advantages, the flexibility and healthy work-life balance offered by online operations is important to Ger and Chemel as they begin a new chapter in their lives.