Managers of Hike America magazine want to establish a selling price for a one-month full-page advertisement...

 

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Managers of Hike America magazine want to establish a selling price for a one-month full-page advertisement in their magazine. Hiking Trails magazine, their primary competitor, charges $5,000 per month for a full-page ad. The managers of Hike America believe that they can justify a higher selling price by quantifying the EVC and has established the following information: Number of readers (a) Percent of readers who buy advertised products each month (b) ************ Number of readers per month buying advertised products (a) x (b).. Monthly sales por reader who buys advertised products (a).. Contribution margin ratio (b). Hike America 200,000 .002 400 $100 25% Hiking Trails 300,000 .001 300 $80 25% Required: • Compare the monthly contribution margin per reader who buys advertised products. • Compare the monthly contribution margin provided by a full-page advertisement. • From a value-based pricing standpoint what is Hike America's differential value and economic value to the customer (EVC)? • From a value-based pricing standpoint what range of possible prices should Hike America consider when setting a price for a full-page ad. per month. Managers of Hike America magazine want to establish a selling price for a one-month full-page advertisement in their magazine. Hiking Trails magazine, their primary competitor, charges $5,000 per month for a full-page ad. The managers of Hike America believe that they can justify a higher selling price by quantifying the EVC and has established the following information: Number of readers (a) Percent of readers who buy advertised products each month (b) ************ Number of readers per month buying advertised products (a) x (b).. Monthly sales por reader who buys advertised products (a).. Contribution margin ratio (b). Hike America 200,000 .002 400 $100 25% Hiking Trails 300,000 .001 300 $80 25% Required: • Compare the monthly contribution margin per reader who buys advertised products. • Compare the monthly contribution margin provided by a full-page advertisement. • From a value-based pricing standpoint what is Hike America's differential value and economic value to the customer (EVC)? • From a value-based pricing standpoint what range of possible prices should Hike America consider when setting a price for a full-page ad. per month.

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a Monthly contribution per reader who buys advertised products calculated below Particulars Hike Ame... View the full answer