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You are the new marketing manager of a jewelry cleaning product specially formulated for cleaning precious stones, jewelry, and watches. The product is sold through two large department store chains, which receive a 50% retailer margin. The product’s retail price is $20, although at times it is discounted to $12. The product is primarily promoted through point of purchase displays and salesperson recommendations. In your new marketing role, you are leading a strategic repositioning of the product, including a redesign of its packaging, logo, and brand identity. You have paid $5,000 to a consultant for a new upgraded, modern design. You have manufactured and inventoried a production of 20,000 units with the new branding. The estimated cost of the content and packaging is $5.00 per unit. Three main competitors currently exist in the market. These competitor products are priced between $14 and $17 at retailers. The competition promotes both through various retailers and online websites. You now have to decide the pricing strategy for the newly repositioned jewelry cleaner. In looking at a recent market study, it seems that few consumers are willing to pay more than $20 for the product. You also have to decide how to market the product. You could distribute the product through costume jewelry retailers, or additional department stores. The margin for these retailers ranges from 30% for costume jewelry retailers to 50% for department stores. You have to decide whether to carry out additional promotional activities; however, a budget of $1–2 million to produce advertising messages and to pay for media fees will be required for such promotion. 1. What factors influence the pricing decisions for your product? Comment on how each of these factors may impact the price that can be set. 2. What pricing strategy would you propose for the product? Explain your reasoning. What, if any, discounting strategy would you recommend? 3. What price would you set for the product? What costs and expenses would be involved? Given your recommended price, what would be the break-even point? (Note: refer to the financial powerpoints on BE from earlier in the semester if needed.)
The stock of Jenkins Corporation, a major steel producer, is currently selling for $50 per share. The book value per share is $125.- Why do these two firms have such dramatically different market-to-book ratios?
You've observed the following returns on Crash-n-Burn Computer's stock over the past five years: 13 percent, -8 percent, 16 percent, 16 percent, and 10 percent. a) What was the arithmetric average return on Crash-n-Burn's stock over the five year per..
Hamble, Inc., has sales of $19,070, costs of $10,460, depreciation expense of $2,530, and interest expense of $1,600. If the tax rate is 35 percent, what is the operating cash flow, or OCF?
The market value of the equity of Thompson, Inc., is $780,000. The balance sheet shows $51,200 in cash and $248,100 in debt, while the income statement has EBIT of $109,100 and a total of $180,700 in depreciation and amortization. What is the enterpr..
Gateway Communications is considering a project with an initial fixed asset cost of $2.46 million which will be depreciated straight-line over the 10-year life of the project. At the end of the project the equipment will be sold for an estimated salv..
We have a common stock which has a dividend which grows at 100%for the first 1 year and 200% for the next 1 year. After that it rises more reasonably, but we only know it indirectly. Net profit margin, ATO and financial leverage are .02, 3 and 2 resp..
You’re trying to determine whether to expand your business by building a new manufacturing plant. The plant has an installation cost of $11.6 million, which will be depreciated straight-line to zero over its four-year life. If the plant has projected..
If the distribution had a standard deviation of 4, would a score of 82 be considered an extreme value or an average score near the center of the distribution?
Marc, age 45, sells his personal residence on May 15, 2015, for $180,000. He pays $8,000 in selling expenses and $900 in repair expenses to help sell the residence. He has lived in the residence since 1980, when he purchased it for $55,000. In 1996, ..
Perry Bell paid $6,438 of state and local property tax this year. Compute the after-tax cost of these payments assuming: a. Perry doesn't itemize deductions on his Form 1040. b. Perry itemizes deductions, has a 33 percent marginal tax rate on regular..
American Eagle Outfitters (AEO) recently paid a $.54 dividend. The dividend is expected to grow at a 17.10 percent rate. At the current stock price of $25.67, what is the return shareholders are expecting?
Lisa Simpson wants to have $1,400,000 in 35 years by making equal annual end-of-the-year deposits into a tax-deffred account paying 8.50 percent annually. What must Lisa's annual deposit be? The amount of Lisa's annual deposit must be $ ?
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