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Somerset Inc. has finished a new video game, Snowboard Challenge, Management now is considering its marketing strategies. The following formation is available: Anticipated sales price

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Somerset Inc. has finished a new video game, Snowboard Challenge, Management now is considering its marketing strategies. The following formation is available: Anticipated sales price per unit $80 Variable cost per unit $35 Anticipated volume 1,000,000 units Production costs $20,000,000 Anticipated advertising $15,000,000 The cost of the video game, packaging, and copying costs. Two managers, Jarnes Hamilton and Thomas Seymour, had the following discussions of ways to increase the profitability of this new offering James: I think we need to think of some way to increase our profitability. Do you have any ideas? Thomas: Well, I think the best strategy would be to become aggressive on price. James: How aggressivo? Thomas I wo drop the price to $60 per unit and maintain our advertising budget at $15,000,000, I think we will generate total sales of 2,000,000 units. Jamen: I think that's the wrong way to go. You're giving too much up on the price. Instead, I think we need to follow an aggressive advertising strategy Thoman: How aggressive? James: It wo increase our advertising to a total of $25,000,000, we should be able to increase sales volume to 1,400,000 units without any change in price. Thomas: I don't think that's reasonable. We'll never cover the increase advertising costs, Which strategy do you think is best and why? Would you do nothing? Would you follow the advice of Thomas Saymour? Or would you follow James Hamilton's stratogy

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