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Edwards Products has just developed a new product with a manufacturing cost of $30. The Marketing Director has identified three marketing approaches for this new product. Approach X Set a selling price of $36 and have the firm's sales staff sell the product at a 10% commission with no advertising program. Estimated annual sales would be 10,000 units. Approach Y Set a selling price of $38, have the firm's sales staff sell the product at a 10% commission, and back them up with a $30,000 advertising program. Estimated annual sales would be 12,000 units. Approach Z Rely on wholesalers to handle the product. Edwards would sell the new product to the wholesalers at $32 per unit and incur no selling expenses. Estimated annual sales would be 14,000 units. Rank the three alternatives in order of net profit, from highest net profit to lowest.
A. X, Y, Z. B. Z, Y, X. C. Z, X, Y. D. Y, Z, X. |