How do customer characteristics influence channel design?
What will be an ideal response?
Customer characteristics constitute a major factor that affects the process of shaping international channels to fit overall company objectives. The number, geographic distribution, income, shopping habits, and reactions of customers to different selling methods all vary from country to country and, therefore, require different channel approaches. Regardless of the stage of market development, the need for multiple channel intermediaries increases as the number of customers increases. The converse is also true: the need for channel intermediaries decreases as the number of customers decreases. For mass-market products bought by millions of customers, retail distribution outlets or mail-order distribution is effective. In a country with a large number of low-volume retailers, it is usually cheaper to reach them via wholesalers. Direct selling that bypasses wholesale intermediaries may be the most cost-effective means of serving large-volume retailers.
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Indicate whether the statement is true or false
Mickey Tire Company makes a special kind of racing tire. Variable costs are $220 per unit, and fixed costs are $30,000 per month. Mickey sells 500 units per month at a sales price of $300. If the quality of the tire is upgraded, the company believes it can increase the sales price to $340. If so, the variable cost will increase to $230 per unit, and the fixed costs will rise by 50%. If Mickey decides to upgrade, how will operating income be affected?
A) Operating income will decrease by $15,000. B) Operating income will decrease by $5000. C) Operating income will increase by $5000. D) Operating income will remain the same.
Briefly explain the relationship among the 4 Ps
What will be an ideal response?
Select the incorrect statement regarding the relationship between cost behavior and profits.
A. A pure fixed cost structure offers more security if volume expectations are not achieved. B. In a pure fixed cost structure, the unit selling price and unit contribution margin are equal. C. A pure variable cost structure offers higher potential rewards. D. In a pure variable cost structure, when revenue increases by $1, so do profits.