Given the diagram below, just answer the three questions:

Ants No More - Downstream		SCENARIO I
	Cost	Gross Margin %	Gross Margin $	Selling Price
The Figgis Agency	$10.00	40.00%	$4.00	$14.00
Kane & Associates Brokers	$14.00	5.00%	$0.70	$14.70
Mallory's Experiential Marketing	$14.70	6.00%	$0.88	$15.58
Trexlor Sales Agency	$15.58	7.00%	$1.09	$16.67
Dillon Wholesalers	$16.67	8.00%	$1.33	$18.01
National Retailers	$18.01	45.00%	$8.10	$26.11
Consumer	$26.11
Total Channel Margin
$ / unit	$2.68
% of retail selling price	10.28%
Alternative Channel Structure
The Figgis Agency	$10.00	63.18%	$6.32	$16.32
Odin-azon Online Behemoth	$16.32	60.00%	$9.79	$26.11
Consumer	$26.11
Total Channel Margin
$ / unit	$8.05
% of retail selling price	30.85%

 

 

 

1) What is the lowest possible retail selling price per unit given the initial cost of goods sold per unit and the gross margin requirements of each channel member?

2) Which marketing channel should the Figgis Agency select, traditional or alternative?Why?    

3) Describe a business decision or situation where you would rely on Gross Margin % as the key metric instead of using gross margin $ or $/unit?