You are the marketing manager for the Ariadne brand of products. You have developed a new product in this line and have been preparing the marketing strategy for the launch of this product. You have already decided on the version of the product to launch, and what price to charge retailers for it and the best distribution option. You have determined that the best distribution strategy involves key retailers such as Shoppers Drug Mart. You have also performed the required financial analysis that reflects how much profit will be generated from the product and the associated costs. The financial analysis includes the impact of the decision to reduce the price for key retailers in your channel of distribution. It is the companys policy to provide a reduced price for key retailers because of the higher quantities of the product they sell. Now you must finalize the marketing communications spending that the brands communications campaign will be based on. You have two options given the brands marketing objective of becoming a solid number 2 or 3 player in this already saturated market. You can either spend at a comparable level to competition or you can spend more than competition. You cannot spend less than competition since that would undermine Ariadnes potential for achieving its marketing objective.

The original financial estimates you have developed for Ariadne thus far have assumed that your communications spending will match competition, which you have estimated at $5.00 per case. You are considering increasing this level by 20% to $6.00 per case.

Revise your financial analysis for Ariadne to establish whether increasing your communications spending from $5.00 to $6.00 per case is affordable. Note that the sales volume estimate for Ariadne has been increased in the third estimate to reflect the increased demand expected for the brand as a result of having stronger communications support.

In order to do a financial analysis, marketers must calculate the estimated profit.