Year 2 Plan (Trade In)

. Year 2 Plan (Trade In) Material Presented is for Educational Purposes Only For year 2 of the project, in addition to category growth, the firm is considering a trade-in event to increase sales. (Prices quoted for this plan are at 2024 prices and exclude VAT) Trading in competitor products is a cost-effective way to create awareness and increase household penetration in the trial building phase. The plan that you will evaluate will be executed in the larger grocery chain stores such as Lidl, Migros and Aldi. The information that you have from similar plans in other European markets is that a key factor in the success of these marketing activities is the number of unique consumers that will participate in the trade-in. The mechanics of the trade work as follows: There will be Bounty Basic stands set up either inside the store or in a courtyard just outside. . Consumers will be invited to bring in any single competitor roll of paper towel that they have (new or unpackaged). Consumers will then receive a full roll of Bounty Basic in exchange. The finance department has recommended that the spending on this type of promotional activity should not exceed E60,000. The trade-in event costs E2,500 per 5,000 Bounty Basic rolls given out in addition to the unit cost of Bounty Basic. The % of unique consumers that are reached sing this strategy is a function of the number of Bounty Basic units given out for the total year, as described below. Number of Bounty Basic Rolls given out % of unique consumers reached From 5,000-20,000 35% of the number of rolls given out From 20,000-30,000 35% for 20,000 2% reduction for every additional 5,000 over 20,000 (1.e. 33% for 25,000 samples) From 30,000-onward 3% reduction for every 5,000 samples over 30,000 i.e. 28% for 35.000 samples) For every unique consumer who receives the product, 20% will go on to buy 12 products per year (at the cost you calculated earlier). For simplicity, assume that regardless of when in the year they receive the roll of Bounty Basic, they will purchase 12 units of Bounty Basic from year 2 onwards.

Question 2: Determine the optimal number of 5,000 rolls to be distributed, and justify your choice of strategy. (Note this strategy is only available in Year 2 and will not be repeated)

show workings as evidence.