Breeders Mix Case

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Question 1: What are the manufacturer’s dollar sales of canned dog food sold through supermarkets in the Boston Market?

Answer: $12,000,000

Rationale:
Supermarket sales of dog food will total $5 billion (at manufacturers’ prices) in 2011 (Pg. 115). Canned dog food accounts for 20% of dollar share total dog food (Exhibit 1). Additionally, the Boston Market represents 1.2% of both the U.S. and dog populations, since dog and human populations are highly correlated (Pg. 115). By multiplying these figures, one can deduce that the manufacturer’s dollar sales of canned dog food sold through supermarkets in the Boston Market.

Computed as follows: $5 billion sales x 20% Canned Food Category Share X 1.2% Boston Population

$5,000,000,000 x .20 = 1,000,000,000
1,000,000,000 x .012 = $12,000,000

Question 2: The $500,000 advertising expenditure proposed by Marketing Momentum for the Boston Market is equivalent to what advertising dollar expenditure for a national launch of Breeder’s Mix?

Answer: $44.167 million

Rationale:
The advertising expenditure is $500,000 for the Boston Market, which is only 1.2% of the U.S. population. To find the equivalent advertising dollar expenditure for a national launch of Breeder’s Mix, divide the $500,000 Boston Market expenditure by 1.2%. In addition, there is a $30,000 slotting fee, which is 6% of the $500,000 Boston Market advertising expenditure. After adding the 6% incremental cost of the slotting fee to the estimated national advertising expenditure, the total cost for the national launch of Breeder’s Mix is $44.167 million.

Computed as follows: $500,000 Boston advertising / 1.2% Boston population x 1.06 (slotting fee)

$500,000 / .012 = $41,666,666.67
$41,666,666.67 x 1.06 = $44,166,666.67
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