Polaris and Arctic Cat sell several different products; most are profitable but some are not. Teams of employees in each company make advertising, investment, and product mix decisions. A certain portion of advertising for both companies is on a local basis to a target audience.
1. Contact the local newspaper and ask the approximate cost of ad space (for example, cost of one page or one-half page of advertising) for a company’s product or group of products (such as Polaris ATVs).
2. Estimate how many products this advertisement must sell to justify its cost. Begin by taking the product’s sales price advertised for each company and assume a 20% contribution margin.
3. Prepare a one-half page memorandum explaining the importance of effective advertising when making a product mix decision. Be prepared to present your ideas in class.