2C2F EDWARDS PRODUCTS HAS JUST DEVELOPED A NEW PRODUCT WITH A MANUFAC...

226.

CSO: 2C2b

LOS: 2C2f

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.

Y, Z, X.

c.

Z, X, Y.

d.

Z, Y, X.