Scenario P\&G's Bounty concept "The Quicker Picker-Upper" is well established in the USA and several European countries. Bounty is a high-quality product that stands for absorbency as well as strength and soffess. The concept of Bourty Basic has now allowed P\&G to play in the mid-tier paper towel category too. After a successful launch of Bounty Basic in the US, P\&G Gemany is now considering launching this mid-tier offering in Gennany in January 20221 (note that these types of investment decisions would normally be made at a Head Quarters level in Cincinnati \& Dubai, and not at a country level). Results bok promising after an initial phase of soft launch testing for the German Market. Consumer market research estimates that the category base volume on high-tier Bounty paper towels in 2021 was 12,000 cases with each case containing 24 consumer units. The market for high-tier paper towels in Germany is expected to grow by 5% in 2022 then decrease by 0.1% in 2023 . Pricing Decisions The commercial team has recommended the optimal pricing strategy for Bounty Basic to be 66% of the cost to retriler of existing Bounty High-tier. 'The product cost (COGS) is 50% of revenue received by P\&G. (table below) The marketing expenses to deliver these sales are 150,000, incurred annually. There is an additional 80,000 in Sales and Adrinistration Expenses (combined), incurred annually. The firm pays corporate tax in Germany at a rate of 15%, one year in arrears, and given that there is a double taxation agreement between Germany and the USA, profits will not be taxed in the USA. 2 To launch this product P\&G will purchase machinery costing 2,500,000 that can be depreciated straight-line to zero over 5 years, and will also require an upfront investment in net working capital of 100,000. All costs quoted are exVAT and costed at 2022 prices. The team in Germany has advised that the local VAT rate is 19% and inflation is hitting an all-time high of about 7.9% as of August 20224. Inflation is expected to stabilize at 5% for 2023 and beyond. Bounty High-Tier Pricing in other European markets: oneli rnce assumes items not on promotion. Year 1 Plan (Brand Equity and Awareness Building) Since Bounty Basic is launching in the mid-tier paper towel segment, it is important that costs are minimized wherever posisile. As such the finance team is recommencing a kunch without the support of television media. One altemative awareness building strategy that has been suggested is print media. The marketing team is intent on printing copies that scored well on consumer tests. Based on the copy scores, awareness building and conversion to purchase intent, you have received a model which projects the walume growth per 10,000 investrment in magazines and newspapers. The table below summarizes the projected results: Question 1: Determine the optimal level of investment in print media, in terms of maximizing your profit, and justify your choice. (Note this strategy is only applicable in Year 1 , yet the volume uplift will hold thereafter). Scenario P\&G's Bounty concept "The Quicker Picker-Upper" is well established in the USA and several European countries. Bounty is a high-quality product that stands for absorbency as well as strength and soffess. The concept of Bourty Basic has now allowed P\&G to play in the mid-tier paper towel category too. After a successful launch of Bounty Basic in the US, P\&G Gemany is now considering launching this mid-tier offering in Gennany in January 20221 (note that these types of investment decisions would normally be made at a Head Quarters level in Cincinnati \& Dubai, and not at a country level). Results bok promising after an initial phase of soft launch testing for the German Market. Consumer market research estimates that the category base volume on high-tier Bounty paper towels in 2021 was 12,000 cases with each case containing 24 consumer units. The market for high-tier paper towels in Germany is expected to grow by 5% in 2022 then decrease by 0.1% in 2023 . Pricing Decisions The commercial team has recommended the optimal pricing strategy for Bounty Basic to be 66% of the cost to retriler of existing Bounty High-tier. 'The product cost (COGS) is 50% of revenue received by P\&G. (table below) The marketing expenses to deliver these sales are 150,000, incurred annually. There is an additional 80,000 in Sales and Adrinistration Expenses (combined), incurred annually. The firm pays corporate tax in Germany at a rate of 15%, one year in arrears, and given that there is a double taxation agreement between Germany and the USA, profits will not be taxed in the USA. 2 To launch this product P\&G will purchase machinery costing 2,500,000 that can be depreciated straight-line to zero over 5 years, and will also require an upfront investment in net working capital of 100,000. All costs quoted are exVAT and costed at 2022 prices. The team in Germany has advised that the local VAT rate is 19% and inflation is hitting an all-time high of about 7.9% as of August 20224. Inflation is expected to stabilize at 5% for 2023 and beyond. Bounty High-Tier Pricing in other European markets: oneli rnce assumes items not on promotion. Year 1 Plan (Brand Equity and Awareness Building) Since Bounty Basic is launching in the mid-tier paper towel segment, it is important that costs are minimized wherever posisile. As such the finance team is recommencing a kunch without the support of television media. One altemative awareness building strategy that has been suggested is print media. The marketing team is intent on printing copies that scored well on consumer tests. Based on the copy scores, awareness building and conversion to purchase intent, you have received a model which projects the walume growth per 10,000 investrment in magazines and newspapers. The table below summarizes the projected results: Question 1: Determine the optimal level of investment in print media, in terms of maximizing your profit, and justify your choice. (Note this strategy is only applicable in Year 1 , yet the volume uplift will hold thereafter)