INSTRUCTIONS: ALL FORMULAE AND CALCULATIONS MUST BE SHOWN. 1. Calculate each of the following: a. Markup dollars, $90.00. These markup dollars are 25% of the retail price on the product. What is the product's cost and the Markup @ Retail? b. Merchandise Cost, $12.00; Markup @ Retail, 40.0%. What is Markup @ Cost? 2. You have just completed a year-long test market for a product to be commercialized. A strategic adjustment was made during the test. Initial Six Months Last Six Months Price Units Sold Price Units Sold $40.00 20,000 $50.00 18,000 Given these data, the best use of these data would be to: a. Calculate Market Share d. Calculate Return on Investment b. Calculate Financial Payback e. Calculate Price Elasticity c. Calculate Gross Margin In the space below, show the formula and calculation you would use to justify your answer to 2a above. Application A. You are the manufacturer of Supertron. Your Suggested Unit Retail Price is $150.00. Your profit margin is 25.0% and you are offering the following incentives to the retail trade sector to encourage them to sell your product. The retailer can qualify for: Incentives Discounts (%) Performance Requirement Promotional Allowances Trade Discount Cooperative Advertising Quantity Discount 5.0 30.0 $1,500 10.0 15.0 20.0 2/10, Net 30 Off-shelf Display Retailer Advertising Copy Less than 10 cases 10-25 cases 25 plus cases Proper Payment Cash Discount You extended your offer to the retailer on June 1, 2018. You received confirmation of her order on June 8th and payment was received on June 12th. She has provided you with her advertising copy and a picture of her display. Finally, her order is for thirty cases. A case contains twelve units. Your wholesaler qualifies for a ten percent per unit sales commission. If you are the retailer: a. Given the $150 Suggested Retail and the discounts you qualify for and accept, what is your cost per unit purchase price? b. Based on your calculations in "a" above, what are the total Gross Margin Dollars you would from receive from this deal and what is your Gross Margin %? c. What is the Manufacturer's price to the Wholesaler? retailer sets her retail price at S125.00 per unit, what are her Markup a Cost and Markup @ Retail Percentages, given the cost she paid to purchase the item? Application B. You are the brand manager for your company. Your boss has passed on to you the following information. The date is January 1, 2018. As brand manager, he asks you to use Product Portfolio Analysis to evaluate the following product mix. Your Tax Rate = 40%. Sales 2017 2017 Sales (000s) 2017 $ Investment (000s) Total Total Cash Major Mkt. Share per 1% Mkt. Item 2016 2017 Assets (000) Flow (000) Depreciation Industry Competitor Target Share Gain 80.0 104.0 600.0 (10.0) 425.0 125.0 28.0 12.0 2 100.0 112.0 550.0 25.0 300.0 55.0 37.0 2.0 10.0 50.0 (2.0) 125.0 80.0 50.0 2.0 4 400.0 425.0 1200.0 200.0 800.0 125.0 6.0 10.0 5 125.0 127.0 600.0 50.0 25 2200.0 800.0 4.0 5.0 40 20 10 8.0 #. Identify and classify each of the products above. (Show all calculations that were necessary to evaluate the product mix. b. Assume that one of the products above reflects market information that consumers are insensitive to price, the product concept is new to the market, and the item is a high technology product. Given this information, which of the following marketing tactics would be appropriate to manage the item/ a. Product Development Strategy d. Market Penetration b. High Profile e. Diversification c. Trade Down Application C. It is January 1, 2018. Assume that your boss gives you the following information on these product items. 2016 2017 2017 2017 2017 2017 Sales 2018 S Investment (000) (000) Total Depreciation Major Mkt. Share Per 1 % Mkt. Item Sales Sales Assets NP AT) Expense Industry Competitor Target% Share Gain 2 3 50.0 55.0 110.0 10.0 12.0 220.0 56.0 4.0 40.0 100.0 108.0 200.0 18.0 30.0 400.0 80.0 28.0 25.0 200.0 240.0 500.0 25.0 90.0 800.0 100.0 30.0 100.0 125.0 170.0 350.0 (15.0) 15.0 500.0 40.0 50.0 25.0 26.0 100.0 5.0 300.0 100.0 40.0 20.0 All sales, profits, expenses and costs to obtain market share gain data are in (000s). The tax rate is 40.0%. 50.0 2.0 a. Identify and classify each of the Items 1-5. Justify and explain your answer. Item 1 Item 2 Item 3 b. What is your Total Cash Flow figure for these five product items? c. If you were to decide to invest to gain competitive advantage for your product mix versus your major competitor, which product or products would you invest, and how much per item, given your available Total Cash Flow dollars