Question #1
You are the vice president of marketing at a large corporation. One of your best-selling products is brand XYZ. It is a toothpaste that provides excellent protection against cavities. You also sell XYW which is the same toothpaste but adjusted to focus more on providing fresh breath.
The head of your promotion department comes to your office and tells you that based on the very reliable study, if the company were to increase the annual social media promotion budget for XYZ by $500,000, the sales of XYZ would go up by $2,000,000.
Assuming that these estimates are perfectly accurate, what additional information would you like to have before deciding to approve the increase in the social media promotion for XYZ by $500,000? List all the information that you think is necessary and explain why it is relevant to the decision.
Question #2
This is a creative assignment. You will have to write a very short story of 55 words or less. The title word count is separate, and the title cannot exceed 7 words.
Your story can be about anything, but one of the main characters must be Alexa, the voice-activated personal assistant of Amazon. The goal is to make Alexa look good, but also to create an exciting story that will make an impression and possibly go viral. Do not underestimate the importance of the title, it has to be something that grabs the attention of the audience and makes them curious enough to want to read the story.
Question #3
Adelais Inc. sells brand A. The variable cost per unit is $16, and the contribution margin is 20%. The fixed costs are $4,000,000 a year.
The size of market where brand A is sold is 20,000,000 units. Currently A sells 3,000,000 units. The variable costs per unit is $16.
3.1
What is the BEP in units?
What is the necessary market share for A to break even?
What is the profit?
3.2
Adelais is considering two different strategies. In the first one, they want to hire 4 salespeople. Each one will receive a salary of $50,000 a year. They will also get paid with a commission of 10% of sales. The sales are expected to increase by 50%.
What is the new BEP in units?
What is the annual profit?
3.3
The second strategy: Instead of hiring 4 salespeople, the managers of Adelais are considering a 10% price cut. The price-demand elasticity E = – 4.0. [Reminder: E = (% change in demand)/(% of change in price)].
What is the profit?
What is the new BEP in units?
If the price-demand elasticity was unknown, calculate how high it should be in order to generate the same profits as in the case without the price cut.
Question #4
A watch and clock manufacturer has realized that he is in the business of selling machines that measure time. How should he segment the market? Tip: We are looking for identifying segmentation variables that are relevant for this market. Do not try to select a target market, this is only about identifying the segmentation variables.
Bonus question
There was a curious trial at the kingdom of Oz. There were three defendants, A, B, and C. One of them was a knight who always told the truth. Another one was a knave who always lied. The third one was a spy. Sometimes he told the truth and sometimes he lied, depending on which answer suited his interests best. Nobody knew which one of the three defendants was the knight, the knave, or the spy.
The wizard of Oz was acting as the judge, and he was trying to identify the spy. During the interrogation the defendants made the following statements:
First, A accused B of being a spy.
Then, B accused C of being the spy.
Then, C pointed to one of the other two defendants and said: “He is really the spy!”
At this point the Wizard of Oz convicted the spy.
Which one did he convict?
Who did C point to and accused as being the spy?
What was the Wizard’s reasoning for his decision?
Provide a DETAILED explanation!
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