Problem 1:

Given: List Price $150.00, Retailer incentive trade discount @ 40%; Display Allowance at 5%; Quantity Discount at 10%; Cash Discount at 2%; Coop Ad at 50% of qualified advertising expense. The quantity discount program is as follows: 1-25 cases, 5%; 26-50 cases, 10%; 51-100 cases, 15%, 100+ cases, 20%. There is a 7% commission for manufacturer representative and the manufacturers profit margin is 20%.

The offer was made to the retailer on February 1, 2010 with the invoice received and paid on February 9, 2010. The retailer order was for 20 cases and a picture of an off-shelf display was included. The retailer indicated she had spent $800 on advertising (to qualify for discounts offered, proof of performance must be submitted to be manufactured.

1. Set up the Deal Sheet showing the amounts of all qualified discounts and allowances and all margin paid to each channel member.
2. Calculate the cost for the retailer, manufacturer agents and manufacturer.
3. Calculate the total channel of distributions margin if the product retails for $130.

Problem 2:

Product Portfolio

	Sales Growth		Industry	Major Competitors
Product	2008	2009	Sales (2009)	Sales (2009)	Cash Flow
A	100	112	500	100	6.1
B	225	260	3000	420	0.5
C	5	6	60	15	2.1
D	400	440	1500	550	22
E	650	710	1800	400	40
F	80	90	1000	20	-0.5

*All Dollar Values are (000s)

a. Categorize each product within the product portfolio model. Calculate SGR and MS to justify your answers.

b. Calculate total cash flow for the product line.

EXTRA CREDIT

Given:

Price (Unit) $20.00 Copy Express (V) $14 per 1000

Labels (V) $500 per 1000 Rent (F) $35,000

Tooling (F) $125,000 Royalties (V) $500 per 1000

Depreciation (E) 10,000 Advertising $5,000

Retailers Margin 40%

1. Calculate CM price and percentage of sales, for the manufacturer.
2. Calculate breakeven units and sales.
3. What market share is required to achieve a 20% return on the firms $150,000 investment (HINT: Calculate the firms (MFR) Profit Margin $).