Question
Video Concepts Inc. (VCI) markets video equipment and films through retailers. Presently, VCI is planning an Intergrated Marketing Campaign (IMC) for a unreleased film entitled
Video Concepts Inc. (VCI) markets video equipment and films through retailers. Presently, VCI is planning an Intergrated Marketing Campaign (IMC) for a unreleased film entitled Touch of Orange. as to whether it should obtain the distribution rights to an unreleased film titled Touch of Orange. The film will be offered via a multi-channel distribution strategy by VCI both directly to customers online and to its network of retailers. VCIs investment in the IMC campaign would be $150,000. VCI estimates that the total market for the film would be 100,000 units. Other data are as follows: Cost of distribution rights for film $125,000 Label design $5,000 Package design $10,000 Reproduction cost of videos (per 1,000) $4,000 Manufacture of labels and packaging (per 1,000) $500 Royalties (per 1,000) $500 VCIs suggested retail price for the film is $20 per unit. The retailers margin is 40 percent. A. What is VCI's unit contribution when marketing online directly to final consumers? (state in dollars) B. What is VCI's unit contribution when marketing to its network of retail consumers? (state in dollars) C. What is the breakeven point in units when marketing to final consumers? D. What is the breakeven in units when marketing to its network of retail consumers? E. If VCI's IMC campaign only targets final consumers directly, what market share would the film have to achieve to earn a 20 percent return on advertising investment (ROAI)? F. If VCIs IMC campaign only targets retail consumers, what market share would the film have to achieve to earn a 20 percent return on advertising investment (ROAI)?
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