Product Z is sold to wholesalers for $5.43 and sold to end consumers for $9.99. The size of the market is $34,000,000 annually (based on retail sales); product Zs share (in dollars) of this market is 28%. The fixed costs involved in manufacturing and managing Product Z are $1,200,000 and the variable costs involved in manufacturing and managing Product Z are $0.91 per unit. The advertising budget for Product Z is $1,000,000. Salespeople are paid entirely by an 8.5% commission based on the manufacturers selling price.

Strategy 2: Lowering the price

7. Calculate the total sales volume (in units) needed to maintain the current profit level if the manufacturer lowers its price by 25%.

8. Calculate the market share needed to maintain the current profit level if the manufacturer lowers its price by 25%.

Strategy 3: Increasing the sales commission

9. Calculate the total sales volume (in units) needed to maintain the current profit level if the manufacturer increases the sales forces commission to 15%.

10. Calculate the market share needed to maintain the current profit level if the manufacturer increases the sales forces commission to 15%