Measure Marketing Help!

Intro

Exam 2 – Module 2 Costs, Margins, Markups, and Profits   This exam is an individual exam. Make sure that you write your answers clearly. Any answer that cannot be understood or determined by the professor will be marked wrong.   Working with or consulting with another student on this exam is also academic misconduct. This includes working in groups, comparing your answers to those of another student, asking another student for help on the exam, and/or asking another student any questions about the exam. All questions about the exam should be directed to Dr. Edmondson.   Students suspected of academic misconduct will receive a failing grade for the course. Answers in your MS Excel file must be computed using appropriate MS Excel formulas. You will not receive credit for answers typed in to individual cells. Students are required to upload this completed Excel file to the D2L Dropbox folder by the due date.

Section 1

1. Compute the retailer’s selling price for each markup (%) scenario in Table 1 above. (6 pts.) 2. Compute the retailer’s margin (%) for each markup (%) found in Table 1 above. (6 pts.) 3. Theoretically, which percentage should be bigger – margins (%) or markups (%)? Why? (Use complete sentences to explain your answer.) (4 pts.) ________________________________________________________________________________________ ________________________________________________________________________________________ ________________________________________________________________________________________ ________________________________________________________________________________________ ________________________________________________________________________________________

Section 2

Morton International, Inc. is a manufacturer of plain, iodized table salt. Table 2 provides information pertaining to the marketing channel for a four-pound (4-lb.) box of Morton’s table salt. Desired profit margin (%) are known as well as Morton’s cost per unit.

4. What is the unit cost ($) for each organization in the marketing channel? Show in Table 2 above. (6 pts.) 5. What is the unit margin ($) for each organization in the marketing channel? Show in Table 2 above. (3 pts.) 6. What is the markup (%) for each organization in the marketing channel? Show in Table 2 above. (3 pts.)

7. What is the channel margin ($)? Show to the right. (2 pts.) 8. What is the channel margin (%)? Show to the right. (2 pts.)

9. If Morton’s costs increase by 5%, and each of the organizations in the channel want to maintain the same profit margin (%), what is the new retail price of a Morton’s 4-lb box of table salt? (6 pts.)

Section 3

10. What is the cost (purchase price) at each level of the marketing channel? (Write answers in Table 3) (4 pts.)    11. What is the margin ($) at each level in the marketing channel? (Write answers in Table 3.) (4 pts.) 12. Based on the information given at the beginning of this section, what is the margin ($) and margin (%) for the entire marketing channel as a whole? (Write your answers below.) (4 pts.)

13. Interpret the channel margin ($) metric calculated in Question 12.What does the answer mean? (3 pts.)   _____________________________________________________________________________________________ _____________________________________________________________________________________________ _____________________________________________________________________________________________             ­­­­­­­­­­­­­­­­­­­­

14. A large retailer account demands that its profit margin increase from 28% to 33%. If wholesaler and distributor want to maintain their current unit margin (%), what will be the new margin ($) and margin (%) for the manufacturer? Remember, intermediaries’ cost can change, but manufacturer’s cost will not change. (Write your answers below.) (5 pts.)

Section 4

A grocery store chain manufactures and sells its own marinade that consumers can use when cooking meats such as turkey, beef, chicken, and pork. This grocery store utilizes a hybrid channel to distribute these private label marinades to consumers. The marinade is sold in its brick-and-mortar stores as well as online. Table 4 contains information on the grocery store’s hybrid channel.

15. What is the average margin ($) for the hybrid channel? (5 pts.)

16. What does this number tell you about the hybrid channel? Write one complete sentence explaining what the number means for the channel. (3 pts.) _______________________________________________________________________________________    _______________________________________________________________________________________ _______________________________________________________________________________________        

17. What is the average margin (%) for the hybrid channel? (5 pts.)  

Section 5