Unilever CVP Analysis: Based on your analysis of the company's dry spray launch using the CVP handout, do you recommend a passive or aggressive marketing strategy?

Justify your position with noncost arguments, calculations, and other factors relevant to the case.

*please note: both strategies are correct, so critically analyze the scenario and defend your recommendation*

Unilever CVP Analysis Worksheet BMGT 221 10.27.16 A meeting of senior managers at Unilever has been called to discuss the pricing strategy for a new Axe Dry Spray. Part of the discussion will focus on the problem of forecasting sales volume. A new technique for estimating the probability of achieving target sales and profits will be discussed. This requires managers to estimate demand for the new product and assign probabilities. The management accountant is in favor of this approach, as she wants to avoid having a single estimate for sales Details of pricing strategies The first strategy is to set a selling price of S4.49 with annual fixed costs at $1,000,000. A number of managers are in favor of this strategy, as they believe it is important to reduce costs. The second strategy is to have a much higher expenditure on advertising and promotions and set a selling price of S4.99. With the higher selling price, the annual fixed costs would increase to si,400,000. The marketing department is very clear that greater expenditure on advertising and promotions is essential for this product. The following probability distribution has been agreed with the managers after consultation and is the same for both selling prices. Managers from all departments have agreed to this estimate. Estimated demand (units)Estimated probability 700,000 15 1,000,000 12 1.300.000 35% 1.000.000 Variable costs per unit