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Management is now considering its marketing strategies. Following information is given: Anticipated sales price per unit $40 Variable cost per unit $20 Anticipated volume 400,000
Management is now considering its marketing strategies. Following information is given: Anticipated sales price per unit $40 Variable cost per unit $20 Anticipated volume 400,000 Production costs $6,000,000 Anticipated advertising $2,000,000 Both managers David Hunter and Jamie Berry had their own idea to increase their profitability.Jamies idea was to drop the price to $28 per unit and maintain advertising budget at $2,000,000. He thinks they will generate sales of 1,500,000 units David disagreed with Jamies approach. He thought Jamie was giving too much up on price and that they needed a less aggressive strategy. Davids approach to increase profitability was to increase their advertising to a total of $6,000,000. He thinks they should be able to increase sales volume to 1,300,00 units without any change in price. Jamie didnt think Davids approach was reasonable. They will never cover the increased advertising costs. I have to chose what the best idea is: doing nothing, davids or jamies idea
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