Bundling

A. If selling on low price, what is the implication for decisions you will make on spending (Advertising, PR, Branding, Channel Support, Quality, Efficiency, etc.)?

When the discount rate increases from 15% to 40%, the company faces a 37.3% drop in its total value. The loss will be $5,609,132. the largest difference rate comes from the silver segment. Firstly, the silver segment has the most significant amount of customers. The requirement of being a silver customer is small ( fly with the Northern Aero at least one time). Secondly, each year some of the customers will degrade from the platinum or gold segment to the silver segment. Due to the

Thus, the firm should sale 44,461.54 kg at retail price of 6.85 to achieve the same profit impact as selling 30 tons at retail price of 8.20.

Breakeven Analysis for Product Tylenol Approach 1 - Same price as Tylenol Approach 2a - Cheaper than Tylenol Approach 2b - Cheaper w/lowered trade cost $ $ $ $ Unit Cost (Variable Cost) 0.60 0.60 0.60 0.60 Trade Cost (Selling Price to Retailers) $ 1.69 $ 1.69 $ 1.05 $ 0.70 Fixed Cost (Advertising) 2,000,000 6,000,000 6,000,000 6,000,000 Break-Even Quantity [Fixed Cost/(Trade Cost-Unit Cost)] 1,834,862 5,504,587 13,333,333 60,000,000 Contribution Margin (Unit) 64% 64% 43% 14%

Discuss how online marketing could provide competitive advantages in the industry you analyzed in question A.

Consolidated Company makes cardboard boxes. During the most recent accounting period Consolidated paid $60,000 for raw materials, $48,000 for labor, and $52,000 for overhead costs that were incurred to make boxes. Consolidated started and completed 400,000 boxes. Consolidated desires to earn a gross margin that is equal to 40% of product cost. Based on this information the selling price per box is:

The point of profit maximization for the firm in the given scenario occurs at a quantity of 8 units. At this point they have maximized their profit and as you can see to go beyond this point would cause the firm to incur economic losses.

3. Repeat the Question 2 analysis, but now assume that the new marketing program is implemented.

You are the marketing manager for a specialty retailer that sells customized handbags. Describe how the company could benefit from one-to-one marketing. The company is more likely to attract customers by offering discounted items which are automatically selected to appeal to the individual recipient. Once clientele is received, the personalization of offerings can be based solely upon individual purchasing records because of the simplified and repetitive nature of their business. By

The revenue is $600,600*1.2= $720,720. The variable cost changes as sales increases and fixed cost stays the same, the gross profit is $175,500. After tax, the net income is $100,557.

Because the package price cannot exceed the summed market prices of the individual items included in the package plus the opportunity cost of the time consumers would otherwise devote to home production, circumstances exist for monopolists to profitably raise the prices of commodity bundles an epsilon below the level at which consumers would be induced to make rather than buy.

Companies strive to choose not only the best marketing channels, but also the best profitable channel. A profitable channel can promote and successfully sell out of a product that might not otherwise turn a profit for their producers (New Charter University 2015). “The calculations from the cost accountant for the retail segment accounts were 60 percent of sales, and for the foodservice segment accounts were 40 percent. The cost accountant believes that both channels are profitable. The accountant also believes that the company achieves an overall average gross margin of 60 percent on its sales (Bowersox, D. J., Closs, D. J., Cooper, M. B.,

Consumers will be more likely to buy the other product if they have bought on-not less likely."

When price is $20.6, the quantity is 1,242,425 and profit is $101, we come near to break even point.

The strategy for setting a product’s price often has to be changed when the product is part of a product mix. In this case, the firm looks for a set of prices that maximizes its profits on the total product mix. Pricing is difficult because the various products have related demand and costs and face different degrees of competition.