4 8 Create a two-way data table using the values in cells B43:B63 (Rebate) and C42:E42 (Advertising Budget) to analyze the relationships among advertising budget, rebate, and profitability. 5 2 Complete the "Advertising, Rebate, and Profitability" chart to include series for advertising budgets $10,000 and $20,000 on your data table (notice that the series for $0 advertising budget is already on the chart). Price, Advertising, and Rebates for QuickStove Combination Kits Decisions to be Made Price Rebate Advertising Budget $19.21 $5.00 $10,000 Market Information Competitor Pricing Base Demand Market Size $30.00 4,033 5,100 Variable Cost Calculations Variable Production Costs Expected Rebate Redemption Variable Costs w/Rebate $7.000 26% $8.301 Profitability Total Revenue (-) Total Variable Costs (-) Total Fixed Costs $97,9541 $42,3381 $10,000 Howard would like to systematically analyze the marketing of the most popular combination kit that QuickStove sells for $30. He has conducted some market research and believes that the current demand for the kit is 5000 units per year. Quickstove has a competitor that offers a similar product that is also priced at $30. QuickStove and their competitor have roughly the same share of the market. Howard knows that price will impact the relative market share of both firms. He also believes the spending money on advertising will not only increase the market shart of QuickStove, but will also have the effect of increasing the overall demand for the kit for both firms. Howard is considering offering a rebate on the kit to stimulate sales. All of these factors (price, advertising, and rebates) will impact the demand for the kits and the variable cost of the kits (increasing production will decrease the variable costs of the kits). This means that changes in these variables will each impact profitability. He has created a spreadsheet model on the Pricing worksheet that he believes approximates how price, advertising, and rebates will influence profitability. Complete the tasks to help Howard to determine an appropriate price, advertising budget, and rebate amount for the kits. Total Profit $45,615 Demand Calculations Demand Factor Total Demand 100% 5100 Which Scenario is most profitable? Decision Set 3 Inputs Price Rebate Advertising Budget Decision Set 1 Decision Set 2 Decision Set 3 Decision Set 4 $30 $25 $35 $20 $5 $10 $5 $10 $10,000 $5,000 $20,000 $10,000 Goal Seek Parameters and Results Set Cell $C$3 To Value 5100 By Changing Cell $C$5 Price and Profitability Resulting Budget? $3,500.00 $45,650.00 $45,600.00 $45,550.00 $45,500.00 $45,450.00 $45,400.00 Price and Profitability Price $45,615.47 $1 $45,614.47 $5 $45,609.47 $10 $45,599.47 $15 $45,584.47 $20 $45,564.47 $25 $45,539.47 $30 $45,509.47 $35 $45,474.47 $40 $45,434.47 $45 $45,389.47 $50 $45,339.47 $45,350.00 $45,300.00 $45,250.00 $45,200.00 $1 $5 Advertising Budget $1 Selected the correct advertising budget value from the list. $35 $40 $45 $50 Optimal Supplier Contract? $1.00 Advertising Budget $10,000.00 $0.00 $20,000.00 Advertising, Rebate, and Profitability $45,615.47 $0.00 $1.00 $2.00 $3.00 $4.00 $5.00 $6.00 $7.00 $8.00 $9.00 $10.00 $12.00 $14.00 $16.00 $18.00 $20.00 $22.00 $24.00 $26.00 $28.00 $30.00 $0.00 $0.00 $1.00 $2.00 $3.00 $4.00 $5.00 $6.00 00 25 $8.00 $9.00 $10.00 00 TIS COS mers miers $24.00 525.00 $28.00 $30.00 How much should they spend on advertising? How large of a rebate should they offer? Advertising Budget Selected the correct advertising budget value from the list