Financial Aspects of Marketing
Complete the following problems and homework problems in the book.
* Do questions 2, 4, and 8 on pages 51, 52, and 53 (2 and 4 are worth 5 points and 8 is worth 10 points).
* Provide the answers for the following two problems (40 points).
* Perform the questions in this homework assignment that are associated with the Breeder’s Own Case on page 113 (40 points).
A group of Notre Dame students is contemplating pursuing a music career. They have to make their decisions in a hurry because if they are not going to pursue music they have to put a lot of energy into finding a job this spring ...view middle of the document...
Their thoughts are to go big or don’t go at all. As their lead singer says, “If you don’t want to play with the big dogs, stay on the porch”.
Currently they have engaged a local marketing company by the name of River City. River City will provide the promotion for a price of a whopping $125,000. River City has a variety of strong relationships with radio stations and clubs in these cities. This promotion will include local and regional promotion (Chicago, Indianapolis, and Detroit). If “The Rock” wants to branch out further than the region to include cities like Los Angeles and New York, and Miami which are the other cities that River City has ties, the costs will be $500,000.
The advertiser is a new arm of Leo Burnett called “Hip Hopes” that is dedicated to providing social media advertising and promotion for new bands and musicians. Social media advertising and promotion differ from the aforementioned promotions because promotion is dedicated to selling and one to one influencing primarily targeted towards radio, clubs, shows and gigs, and other entertainment marketing appearances and one to one influence opportunities. Social media advertising on the other hand is creating awareness and trial through social media. The promise is to provide a “presence” on the web, Facebook, twitter, and Instagram. Hip Hopes has a flat fee for their social media promotions and advertising of $80,000.
The Rock, through Skylar Diggins (a fan), caught a great break and were offered a relationship with Rocafella Records. Rocafella has agreed to produce the music. This is considered a big break because it will support them with a known brand name and it will expose them to the best production and music accompaniment. However, this relationship costs money. There is a flat fee of $150,000 for the production of the album/CD plus a royalty arrangement of 20 cents for every CD produced. Additionally, the group must develop at least 2 other CDs within the next 3 years under the Rocafella label.
As manager, you find that there are a lot of other costs to be considered to determine whether the group should try to hit it big as a full time job or to pursue other jobs related to their major. The group’s leader is a marketing major, the other group members have majors in finance, history, music, and Russian.
The following is additional cost information as it pertains to the new CD.
CD Packaging | $1.00/CD |
Royalties to groups sampled from | $.25/CD |
“Tase Me” Security | $15,000 |
Administrative and travel costs | $50,000 |
Selling Price to CD Distributor | $11.00 |
For the initial CD and regional marketing, calculate the following:
* Contribution margin per CD Unit for...