Contribution analysis and break eve analysis are surely the most important and most frequently used marketing metrics. These analyses are essential to determine if a firmâ€™s marketing opportunity will mean a financial loss or be profitable. As explained in the chapter, contribution is the difference between the selling price per unit and the variable cost per unit. Break-even analysis that includes contribution tells marketers how much must be sold to break even or to earn a desired amount of profit.
Happy Days Dairy is a producer of high quality organic yogurt, sour cream and crÃ¨me fraiche. They are considering marketing a new line of drinkable yogurt for children. The new yogurt will be offered in packages of six 6-ounce individual containers and it will be available in four flavors. The company plans to use TV and newspaper advertising to promote the new product. Distribution will be through major supermarket chains which currently have over 90 percent of the U.S. yogurt market. The suggested retail price for each 6-ounce individual container will be $0.60. Because the retailer requires a 30 percent markup, Happy Daysâ€™ price to the supermarkets will be $0.42 per six-ounce container. The unit variable costs for the product including packaging will be $0.15. The company estimates its advertising and promotion expenses for the first year will be $1,500,000.
1. What is the contribution per unit for the new childrenâ€™s yogurt product?
2. What is the break-even unit volume for the first year that will cover the planned advertising and promotion? The break-even in dollars?
3. How many units of the yogurt must Happy Days sell to earn a profit of $800,000?
Â You will demonstrate your ability to apply theoretical knowledge gained from marketing classes to the real life situation. You may select one of these options: Real People real Choices book
- Your Final Paper should be written in an academic, research style suitable for presentation at a strategic meeting. The paper may be written with either APA or MLA style of referencing and should include a minimum of five (5) outside references, in addition to the text. The final paper should be a minimum of 5-7 pages, not including title page, executive summary, reference page, and/or appendices. The project needs to be send it through turniti
|Due By (Pacific Time)
||12/12/2014 12:00 am