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Contribution Margin per Unit
(Based on Averages Given in write of Ex 4)
foremost stratum Margin
Manufacturer Selling expense per apparel $17.87
Less Cost of Goods Sold $10.82 $7.05
Less tidy sum Promotion $0.89 $6.16
(5% of MSP)
Less: Ad Allowance (Co-Op Adv) $0.36
(10% of MSP, 20% characterize -.20 X .10 X $17.87)
inaugural class Margin per apparel $5.80
2nd grade Margin
1st year Margin per Shirt $5.80
Less Royalty Payments $0.83
(5% of MSP -- .05 X $17.87) $4.96
2-Year Break-even
withdraw margin is average. of 1st and 2nd year margins
$5.80 + $4.91 = $10.71 / 2 = $5.36
$2,810,000 / $5.36
= 530,000 Shirts
Year 1 Breakeven
$1,455,000 / $5.80
= 250,862 Shirts
Year 2 Breakeven
$1,355,000 / $4.91
= 276,000 Shirts
Simplest Estimate $2,810,000 / $4.96
= 566,000 Shirts
2 Year Forecast -- lead Analysis
Target Audience 100,000,000
(ad campaign target of 15 and everywhere)
consciousness 25%, assume to be even over 2 years
25% / 2 = 12.5% 12,500,000
100,000,000 X .125
Interested in merchandise Category
185/railyard based on survey screening 2,312,500
185/1000 = .185 X 12,500,000
Trial Purchase 1 shirt
Assumed 60% of Definitely would buy(38%)
[.38 x .60 = .228] .



228 X 2,312,500 527,250
Adopters Repeat Purchase
50% of 1st year buyers will repeat buy in year 2
527,250 / 2 = 263,625 x 50% 131,813
Total Estimated Demand over 2-Year Period 659,063
Fixed Costs of 2-Year Marketing Program
2-years 1st Year 2nd Year
Retail Displays $1,000,000 $500,000 $500,000
(10,000 x $100)
Advertising $1,200,000 $600,000 $600,000
Additional Salespeople $510,000 $255,000 $255,000
(3 for 2 years @ $85,000)
Licensing Fee $100,000 $100,000 0
Fixed for 1st year only
Totals $2,810,000 $1,455,000 $1,355,000
1. Assume budget items will be spent evenly over the two years
2. Note no expenses listed for new sales forceIf you essential to get a full essay, order it on our website: Orderessay



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