Economic Analysis
Marketing Economic Analysis
Rajat Sahai has just become the product manager for brand X. Brand X is a consumer product with a retail price of Rs. 10. Retail margins on the product are 33 percent, while wholesalers take a 12 percent margin.
A total of 20 million units of 'brand X and its direct competitors are sold annually; brand X has 24 percent of this market. Variable manufacturing costs for brand X amount to Rs. 0.90 per unit. Fixed manufacturing costs amount to Rs. 9,000;000;
The advertising budget for brand X is Rs. 5,000,000. The brand X product manager's salary and expenses total Rs. 350,000. Salespeople are paid entirely by commission; this is 10 percent. Shipping costs, breakage, insurance, etc. amount to Rs. 0.20 per unit.
(1) What is the unit contribution for brand X
(2) What is brand X break-even point?
(3) What market share does brand X need to break even?
(4) What is brand X's profit impact!
(5) Industry demand is expected to increase to 23 million units next year. Mr. Sahai is considering raising his advertising budget to Rs. 10 million.
(I) If the advertising budget is raised, how many units of brand X will have to be sold for it to break even?
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(ii) How may units of brand X will have to be sold for it to achieve the same profit impact that it did this year?
(iii) What will brand market share have to be next year for its profit impact to be the same as this year's?
(iv) What market share would the brand X need next year so as to increase its
Profit Impact to Rs. 10 million?
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(6) Mr. Sahai has an alternative to increase the retail margin to 40 instead of 33 as of now, when the market demand goes up to 23 million units next year.
(i) How many units of brand X will have to be sold for it to break even?
(ii) How may units of brand X will have to. be sold for it to achieve the same profit impact that it did this year?
(iii) What will brand market share have to be next year for its profit impact to be the same as this year's?
(iv) What market share
Rajat Sahai has just become the product manager for brand X. Brand X is a consumer product with a retail price of Rs. 10. Retail margins on the product are 33 percent, while wholesalers take a 12 percent margin.
A total of 20 million units of 'brand X and its direct competitors are sold annually; brand X has 24 percent of this market. Variable manufacturing costs for brand X amount to Rs. 0.90 per unit. Fixed manufacturing costs amount to Rs. 9,000;000;
The advertising budget for brand X is Rs. 5,000,000. The brand X product manager's salary and expenses total Rs. 350,000. Salespeople are paid entirely by commission; this is 10 percent. Shipping costs, breakage, insurance, etc. amount to Rs. 0.20 per unit.
(1) What is the unit contribution for brand X
(2) What is brand X break-even point?
(3) What market share does brand X need to break even?
(4) What is brand X's profit impact!
(5) Industry demand is expected to increase to 23 million units next year. Mr. Sahai is considering raising his advertising budget to Rs. 10 million.
(I) If the advertising budget is raised, how many units of brand X will have to be sold for it to break even?
'
(ii) How may units of brand X will have to be sold for it to achieve the same profit impact that it did this year?
(iii) What will brand market share have to be next year for its profit impact to be the same as this year's?
(iv) What market share would the brand X need next year so as to increase its
Profit Impact to Rs. 10 million?
,'1:
(6) Mr. Sahai has an alternative to increase the retail margin to 40 instead of 33 as of now, when the market demand goes up to 23 million units next year.
(i) How many units of brand X will have to be sold for it to break even?
(ii) How may units of brand X will have to. be sold for it to achieve the same profit impact that it did this year?
(iii) What will brand market share have to be next year for its profit impact to be the same as this year's?
(iv) What market share