Using the information given in Figure 2-18 and Figure 2-20, what will the Marketing ROI for the Traditional Buyers segment become if the average selling price is changed from $180 to $200, while the unit cost remains at $54? Compute Gross Profit using this formula: Gross Profit = Market Demand x Market Share x Gross Profit per Unit = Market Demand x Market Share x (Average Selling Price x [1 Channel Discount%] Unit Cost).
| | | 162% |
| | | 314% |
| | | 34.9% |
| | | None of the numeric answers given in this question is the correct answer. |
| | | 465% |
FIGURE 2-18 MARKETING PROFITABILITY OF CUSTOMER SEGMENTS Santa Fe Sportswear Performance Fashion Seeker Trend Setter Company Total Traditional Buyer 7,000,000 9.0% Market Demand (customers) Market Share 5,890,000 3.5% 8,000,000 6.0% 20,890,000 6.3% 630,000 $180.00 206,150 $360.00 480,000 $130.00 1,316,150 $189.96 50.0% 50.0% 50.0% 50.0% $180.00 $90.00 $65.00 $94.98 $56.7 $37.1 $31.2 $125.0 40.0% 35.9% 38.8% Customer Volume Average Revenue per Customer Channel Discount Net Selling Price Sales Revenues (millions) Percent Margin Gross Profit (millions) Marketing & Sales Expenses (millions) Net Marketing Contribution (millions) G&A and Other Operating Expenses (millions) Net Profit (before taxes) Marketing ROS Marketing ROI 40.0% $12.5 $22.7 $13.3 $48.5 $7.0 $6.5 $5.0 $18.5 $15.7 $6.8 $7.5 $30.0 $8.0 $6.5 $5.5 $20.0 $7.7 $0.3 $2.0 $10.0 27.7% 18.4% 24.0% 24.0% 224% 105% 150% 162% FIGURE 2-20 MARKETING PROFITABILITY OF TRADITIONAL-BUYER SEGMENT Market Demand 7 million units Volume Sold 630,000 units Market Share 9.0% Net Sales $56.7 million Average Selling Price $180.00 Net Price $90.00 Gross Profit $22.7 million Channel Discount 50% Unit Cost $54.00 Percent Margin Net Marketing Contribution $15.7 million 40% Marketing & Sales Expenses $7.0 million FIGURE 2-18 MARKETING PROFITABILITY OF CUSTOMER SEGMENTS Santa Fe Sportswear Performance Fashion Seeker Trend Setter Company Total Traditional Buyer 7,000,000 9.0% Market Demand (customers) Market Share 5,890,000 3.5% 8,000,000 6.0% 20,890,000 6.3% 630,000 $180.00 206,150 $360.00 480,000 $130.00 1,316,150 $189.96 50.0% 50.0% 50.0% 50.0% $180.00 $90.00 $65.00 $94.98 $56.7 $37.1 $31.2 $125.0 40.0% 35.9% 38.8% Customer Volume Average Revenue per Customer Channel Discount Net Selling Price Sales Revenues (millions) Percent Margin Gross Profit (millions) Marketing & Sales Expenses (millions) Net Marketing Contribution (millions) G&A and Other Operating Expenses (millions) Net Profit (before taxes) Marketing ROS Marketing ROI 40.0% $12.5 $22.7 $13.3 $48.5 $7.0 $6.5 $5.0 $18.5 $15.7 $6.8 $7.5 $30.0 $8.0 $6.5 $5.5 $20.0 $7.7 $0.3 $2.0 $10.0 27.7% 18.4% 24.0% 24.0% 224% 105% 150% 162% FIGURE 2-20 MARKETING PROFITABILITY OF TRADITIONAL-BUYER SEGMENT Market Demand 7 million units Volume Sold 630,000 units Market Share 9.0% Net Sales $56.7 million Average Selling Price $180.00 Net Price $90.00 Gross Profit $22.7 million Channel Discount 50% Unit Cost $54.00 Percent Margin Net Marketing Contribution $15.7 million 40% Marketing & Sales Expenses $7.0 million
