NMC Calcul market penetration strategy to increase market share to the Trendsett
ID: 3349920 • Letter: N
Question
NMC Calcul market penetration strategy to increase market share to the Trendsetter, Its Market Penetration strategy is to lower prices by 5 percent for the trend setter segment. This is expected to increase market share from 6 to 13 percent. What is the new NMC and how does it compare to the original NMC listed on the previous page? lation #2-Suppose Santa Fe Sportswear wanted to use a Santa Fe Sportswear Performance Traditional FashionTrend Setter Company Total Buyer Buyer ,890,000 6.3% 1,316,150 $189.96 50%. $94.98 $125.0 $58.14 38.8% $48.5 $18.5 5,890,000 3.5% 206,150 8,000,000 Market Demand (customers) Market Share Customer Volume 7,000,000 9.0% 630,000 480,000 Average Revenue per Customer 180.00 $360.00 $130.00 50% $65.00 $31.2 50% 50% $90.00 180.00 37.1 Channel Discount Net Revenue per Customer Sales Revenues $56.7 $54.00 $115.38 39.00 Cost of Goods per Customer Percent Margin Gross Profit Marketing Expenses Net Marketing Contribution 35.9% $13.3 $6.5 6.8 $6.5 0.3 40.0% $12.5 $5.0 40.0% $22.7 $7.0 $5.5 $2.0 Operating Expenses $8.0 $20.0 Net Profit (before taxes) 10.0Explanation / Answer
Answer:
Based on the given information:
Market penetration strategy: Lower the prices by 5% for the Trendsetter segment
Expected increase in market share: 6 to 13%
NMC Trend Setter Buyer (Current):
NMC Trend Setter Buyer (Revised Strategy):
Net increase in Marketing profits = 18.6 - 7.5 = $11.1 Million
Trend Setter Current New Market Demand (Customers) 8000000 8000000 Market Share 6.00% 13.00% Customer Volume 480000 1040000 Average Revenue per Customer $130 $123.5 5 % reduction Channel Discount 50% 50% Net Revenue per Customer $65 $62 Sales Revenue (millions) $31.2 $64.40 Cost of Goods per Customer $39 $39 Percent Margin 40% 36.8% Gross Profit (millions) $12.5 $23.7 Marketing Expenses (millions) $5.0 $5.0 Net Marketing Contribution (millions) $7.5 $18.6 Operating Expense (millions) $5.5 $5.5 Net Profit (before taxes) $1.98 $13.16Related Questions
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