NMC Calculation #3-Market Development strategy- Santa Fe Sportswear wants to inc

Question

NMC Calculation #3-Market Development strategy- Santa Fe Sportswear wants to increase the overali market demand for trend setting clothing by growing from 8 to 10 million customers with a S2 increase in marketing expenses. It is assumed that the6% market share would be maintained among trend setters at Santa Fe. million Santa Fe Sportswear Performance Trend Company Setter Traditional Fashion Buyer Buyer Total 7,000,000 5,890,000 8,000,000 20,890,000 Market Demand (customers) Market Share Customer Volume Avérage Revenue per Customer Channel Discount Net Revenue per Customer Sales Revenues Cost of Goods per Customer 9.0% 3.5% 630,000 206,150 480,000 1316,150 $180.00 $360.00 $130.00$189.96 50% 94.98 $125.0 50% $65.00 $31.2 50% 50% 90.00$180.00 37.1 $56.7 $54.00 15.38 $39.00 $58.14 35.9% $13.3 6.5 40.0% $12.5 55.0 38.8% $48.5 $18.5 40.0% Percent Margin $22.7 Gross Profit Marketing Expenses $20.0 Operating Expenses Net Profit (before taxes) $8.0 $7.7 $6.5 $0.3 $5.5 $2.0 $10

Explanation / Answer

Santa Fe sportswear performance Traditional buyer Fashion buyer Trend setter company total Market demand 7000000 5890000 10000000 22890000 market share 9% 3.5% 6% 6.27% customer volume 630000 206150 600000 1436150 Average revenue per customer 180 360 130 189.96 channel discount 50% 50% 50% 50% Net revenue per customer $90 $180 $65 $94,98 sales revenues $56.7 $37.1 $31.2 $125 cost of goods per customer $54 $115.38 $39 $58.14 percent margin 40% 35.9% 40% 38.8% Gross profit $22.7 $13.3 $12.5 $48.5 Marketing expenses $7 $6.5 $7 20.5$ Net marketing contribution $15.7 $6.8 $5.5 $28 operating expenses $8 $6.5 $5.5 $20 Net profit(before tax) $7.7 $0.3 0 $8

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