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A- BRAND

• First brand :- 25% V.C.


100*100 = 10,000
on 25% V.C 2.500
contribution= 7,500
profit @ 3%= 300
fixed cost = 7,200
• First condition:- increase 10% price
and drop the price by 10%
price * volume
110*90 = 9,900
90*25 = 2,250
contribution= 7,650
fixed cost = 7,200
profit = 450
• second condition:- increase 10%
price and drop the price by 30%
price * volume
110*70 = 7,700
70*25 = 1,750
contribution= 5,950
fixed cost = 7,200
Loss = 1,250
B- BRAND
• Second brand :- 50% V.C.
100*100 = 10,000
on 50% V.C 5,000
contribution= 5,000
profit @ 3%= 300
fixed cost = 4,700
• first condition:- Reduce the price 10%
and increase the volume by 10%
price * volume
90*110 = 9,900
110*50 = 5,500
contribution= 4,400
fixed cost = 4,700
Loss = 300
• Second condition:- Reduce the price
10% and increase the volume by
30%
price * volume
90*130 = 11,700
130*50 = 6,500
contribution= 5,200
fixed cost = 4,700
Profit = 500
C- BRAND
• Third brand :- 75% V.C.
100*100 = 10,000
on 75% V.C 7,500
contribution= 2,500
profit @ 3%= 300
fixed cost = 2,200
• First condition:- increase 10% price
and drop the price by 10%
price * volume
90*110 = 9,900
90*75 = 6,750
contribution= 3,150
fixed cost = 2,200
profit = 950
• second condition:- Reduce the price
10% and increase the volume by
30%
price * volume
90*130 = 11,700
130*75 = 9,750
contribution= 1,950
fixed cost = 2,200
Loss = 250
• Neither increase the price nor reduce
the price but collect the revenue 60
days faster compaire the current
purchases of collecting the prices of
90 days
• Even after reduce the credit limit, the
volume is same and the
opportunities gained for the company
on the additional cash made avaible
and b’coz of faster collection is 24%
QUESTIONS
• What strategy you recommend for
each brand to increase the
profitability.
• what are the strategy consequence.
• What thumb rules of the prices
changes, can you formulate for
future use of brand managers.