Marketing Problem Set

Problem Set Marketing Information GBA 5208

Hint: Read Chapters 17 and 18, and videos related to those chapters before doing

this assignment. There is a separate video on markup and breakeven Analysis

1. (a) What pricing objective(s) is a skimming pricing policy most likely implementing? Is the same true for a penetration pricing policy?

(b) Which pricing policy is probably most appropriate for each of the following products?

i. a DVD of a best selling movie

ii. a skin patch to help smokers quit

iii. a “smart” infant/baby car seat that alerts the driver’s cell phone when the child

has unbuckled while the car is in motion, the child was accidentally left behind in

the car, and the car is too hot or too cold

iv. Nintendo’s online SWITCH gaming subscription

(10pts)

2. Is price discrimination involved if a large oil company sells gasoline to taxicab

associations for 3.0 cents less per gallon than what its sells to retail service stations? The

taxicab association will resell to taxi drivers. What happens if the taxi cab association

resells gasoline to both taxicab drivers and to the general public? (10 pts)

3.. If a retailer sells a coat for $139.99. What was his markup if he bought the coat for

$81.79? (15 pts)

• Markup in actual dollars?

• Express markup as a % of cost?

• Express markup as a % of selling price?

*Remember that markup percentage is based on selling price unless otherwise noted

in ALL of the remaining questions.

4. An kitchen/bath retailer purchased a mini chopper for $7.50. He plans to take a 30%

markup. What will the selling price be? (5 pts)

5. An office supply store desires a minimum 40% markup at retail. If a case of copier

paper will be sold at retail for $55.59/case, what is the maximum price the store can pay

for them and still get its stated markup (40%)? (10 pts)

6. A sporting goods store has been offered a closeout purchase on softballs. The cost of

each ball is $1.75, and it should retail for $7.49. What markup at the retail price would

the store obtain? (5 pts)

7. The XYZ Fencing company sells a custom made wooden gate through wholesalers

and retailers. The retail selling price is $850.00 and the manufacturing cost to the

company is $325.00. The retail markup was 35 percent and wholesale markup was 20

percent. (10 pts)

A. What was the cost to the wholesaler? B. What was the cost to the retailer? C. What percentage markup on selling price did the producer make?

8. Kitchenaid is considering expanding its countertop microwave line to include a new “smart” microwave that connects to other smart devices. The “smart” microwave will

require additional expenditures both in manufacturing and marketing. Management

seeks to determine a preliminary price for the new microwave. The fixed costs

associated with manufacturing the microwave are $3,000,000. The variable costs are

$410.50 per unit. Calculate the breakeven point in units at selling prices of $599.00,

$699.00 and $799.00. Show your work. Through your research you know that

“smart” devices are growing in popularity and that several key competitors are

working on their own “smart” microwaves. Currently, there is no clear market leader

in this emerging market for “smart” kitchen appliances. It is estimated that the total

market for smart microwaves in the next year is 125,000 units. Which of these prices

would you recommend and why? Please give a detail explanation for your decision

(15 pts)

9. Yoplait has new line of Greek yogurt in a 9 oz size. The Marketing Manager plans to test market the product in one small market for three weeks. They have calculated the

cost and projected sales for each of the different flavors: Plain cost is .65 each with

projected sales of 11,000 units, strawberry cost per unit is .70 with projected sales of

14,000 units, blueberry cost is .78 per unit with projected sales of 11,000 units. Each

yogurt product will retail at the same price.

Using the average cost pricing and a 35% markup what will Yoplait price these

products at the retail level? Remember to show your work. (10 pts)

10. MyAppliance+ is adding a new wine refrigerator to its appliance product mix. Launching the new wine refrigerator will require an investment of $350,000 to cover

the fixed costs. The selling price is $175.00 with a variable cost of $89.99.

MyAppliance+ wants to make at least $80,000 of profit the first year with this new

product. How many wine refrigerators does the company have to sell to reach this

profit goal? (10 pts)

Total value of Assignment = 100 pts

Do not just give answers. You must show your calculations for each answer. If you do

not, then you will not receive credit (even if your answer is correct). Type or hand write

(and scan) your answers. Submit via the assignment drop box.