Question
Consider four price promotion campaigns, where all three periods are of the same duration (3 weeks). The selling price per unit is $5, and the
Consider four price promotion campaigns, where all three periods are of the same duration (3 weeks). The selling price per unit is $5, and the contribution per unit is $3.
Week | sales (Campaign 1) | sales (Campaign 2) | sales (Campaign 3) | sales (Campaign 4) | |
Baseline | 1 | 969 | 969 | 929 | 1098 |
2 | 979 | 1269 | 779 | 1249 | |
3 | 1349 | 1139 | 1039 | 1229 | |
Promotion | 5 | 1269 | 2119 | 1869 | 2359 |
6 | 1539 | 1639 | 1679 | 2379 | |
7 | 1600 | 2209 | 1749 | 2419 | |
Post promotion | 9 | 1000 | 600 | 1078 | 450 |
10 | 1400 | 700 | 1100 | 700 | |
12 | 1200 | 450 | 1209 | 250 |
Based on the information contained in the above table and considering that there is 20% price deduction for the Campaign 4, calculate the net contribution to profit (contribution foregone from baseline sales and contribution from incremental sales) and evaluate whether the price promotion is profitable for the Campaign 4
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