1. You are a salesperson for Bottoms Up Beverage Company and areintroducing a new bottled water product called Fresh-is-BestSweetwater, sourced from the natural springs of the Great Lakesnear Flint, Michigan. You are preparing to call on the GO GO!Convenience store chain in an attempt to gain authorization forFresh-is-Best Sweetwater distribution and floor displays in all 85of the chain’s outlets. Your regular wholesale price (to theretailer) is $16.80 per case of twenty-four 20 oz. bottles. a. Inorder for GO GO! to obtain its standard margin of 44%, it wouldneed to establish a price to consumer of ____________per 20 oz.bottle.
The chain estimates that it will sell 10 cases per store (240bottles) each week at this price. However, to generate strongconsumer trial of your new product, you would like to convince thechain to authorize large Fresh-is-Best Sweetwater displays in eachstore and offer an introductory price to consumer of 99 cents. Tofacilitate this, Bottoms Up Beverage is offering a “Get Rolling”promotional $12.00 per case cost to the retailer when the storebuys 50 cases or more at a time and fulfills certain merchandisingrequirements (e.g., displays and advertising). b. How many casesper week would the chain have to sell in each store to break evenand make this proposition viable for GO GO!? ____________
Although you hope to sell GO GO! on this program, Bottoms Upalso offers a slightly less attractive deal of $14.40/case (“GetStarted” promotion) with a 20-case minimum per store purchase andless aggressive merchandising requirements. c. How many cases wouldeach store have to sell to break even in this scenario if it stillran a 99 cent introductory price to consumer? _________________.What about if it ran a 1.09 sale price instead?__________________
In test markets, Bottoms Up found that retailers that tookadvantage of Bottoms Up’s $12.00/case “Get Rolling” deal andmerchandised Fresh-is-Best Sweetwater 20 oz bottles as per therequirements with a 99 cent price to consumer generated on averagea 75% increase in sales over those stores that just priced theproduct at the regular price to consumer of $1.25. d. Assuming GOGO! experiences similar results, what would the total incrementalprofit impact be to the GO GO! chain if it chooses to takeadvantage of the “Get Rolling” promotion and offer a consumer priceof 99 cents versus agreeing to the “Get Rolling” promotion butoffering a consumer price of $1.25? ___________ What would thetotal profit impact be to the GO GO! chain if it chooses to nottake advantage of the “Get Rolling” promotion and instead buyFresh-is-Best Sweetwater at the regular price of $16.80/case andsell it to consumers for $1.25/bottle? ____________
