Question
Alliance, Inc. sells gas lamps to consumers through retail outlets. Total industry sales for Alliance's relevant market last year were $100 million, with Alliance's sales
Alliance, Inc. sells gas lamps to consumers through retail outlets. Total industry sales for Alliance's relevant market last year were $100 million, with Alliance's sales representing 5% of that total. Contribution margin is 25%. Alliance's sales force calls on retail outlets and each sales rep earns $50,000 per year plus 1% commission on all sales. Retailers receive a 40% margin on selling price and generate average revenue of $10,000 per outlet for Alliance. a. The marketing manager has suggested increasing consumer advertising by $200,000. By how much would dollar sales need to increase to break even on this expenditure? What increase in overall market share does this represent?
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