Below is an example that calls for some discussion and simple calculations. It is an exercise where you need be precise with the numbers. Numbers are used to support marketing decisions. SHOW the numbers –how you made the key calculations and discuss the reasoning behind your views, recommendations, and ideas.
Case Scenario: Excellent Designs
Chris, a retail owner at a boutique store called Excellent Designs in Montclair, NJ, sells a variety of seasonal apparel, including novel, interesting imports, and complementary products that are not available at the typical chain stores in the mall. The store is open during daytime hours of 9 to 5. The most frequent customers tend to be local residents, women shopping to get something novel for their kids, or stylish or artistic teens shopping for themselves. Sourced from local and foreign distributors, her products have an average margin of 32%.
Considering past seasonal sales and high prices at malls, Chris decides to introduce a new product line of attractive and durable beaded leather handbags imported from Thailand, each uniquely attractive and stylish. Chris puts these with a small sign as “featured gift items” on display in the store window near the seasonal display. This display is visible in the window of the Bloomfield Avenue store, located in a busy shopping and restaurant district.
Each of these bags cost Chris $80 per handbag. Chris lists these featured handbags bags for a price of $200, though the price is barely visible from the window.
PART A: Answer questions A to I (see below.)
What was the total cost (COG, or cost of goods) of the 60 handbags?
(A) __________________.
Calculate the markup the percentage added to the cost of each product.
(B) __________________.
Calculate the margin for these products, the percentage in relation to price.
(C) __________________.
If the retailer sells ten bags, and now has fifty remaining, what is the total $ sales revenue amount collected thus far on the handbags sold?
(D) __________________.
What is the $ dollar contribution amount thus far that has been made on the ten handbags that were acquired and sold?
(E) __________________.
How much of the cost for acquiring all the handbags now remains to be achieved?
(F). __________________.
G.) What should be the marketing goal for Chris right now, during the late spring?
H.) How do you rate the effectiveness of the in-store marketing currently used by Chris (what are positives and negatives)?
I.) Discussion: Make specific suggestions to improve the product mix, promotion, and store/distribution strategies to immediately improve sales.
Product
Promotion
Store Merchandising
Scenario: Discount Strategy
Chris assesses sales of the handbags just after Easter, having just paid rent. Chris sometimes strains to pay the store’s rent during the slow winter months. While business has been good, she is worried about getting stuck with the handbag merchandise and not recover the costs as summer approaches and new apparel is stocked. Since the handbags currently take up space on the featured window display space in the front of the store, Chris is considering changing the price of the handbags and initiating new marketing and in-store merchandising efforts to improve sales. In the past, Chris found that about 50% of her customers could be quite price sensitive and have less willingness to pay for products, but some shoppers eagerly awaited spring sales.
PART B:
Discount PRICING QUESTIONS
If Chris sells the handbags at 50% price discount, make the following calculations:
J.). What was the total cost (COG, or cost of goods) of the remaining handbags?
__________________.
K.). Calculate the markup.
__________________.
L.) Calculate the margin.
__________________.
M.) If the retailer sells all remaining bags, what will be the total $ sales revenue amount?
__________________.
N.) What is the $ dollar amount thus far that has been made on the discounted handbags that were sold, considering their cost?
__________________.
(O.) What is the total $ contribution of all the handbags collectively?
_________________.
(P.) What is the average unit contribution of all the handbags sold?
_________________.
(Q.) Do you think it was a good decision that Chris sold sell the goods at the 50% discount price? Why or why not?
PART C: Short Essay Question:
In Chapter Six, there are two types of mistakes that managers commonly make that are discussed.
A). Explain the two mistakes.
B). Which is mistake usually less destructive?
C). Which mistake is the more serious problem and why?
D). Explain if you made either of the above noted mistakes (or both) during the course and if you have changed your thinking on the importance of these errors.
Attached extra credit or other makeup assignments to this document when you submit this on canvas.
