Serena did some quick research and found that the U.S. population is 300 million people, and the overall U.S. retail market size for women figure skates is $2.2 billion. But Serena knows that not all people living in the U.S. will have an appreciation for the Opal500. Realistically, the Opal500 will be targeted at female consumers, who make up roughly 50% of the U.S. population. Besides, Serena believes that the Opal500 has a better chance of succeeding if it targets girls between 12 and 25 years old who make up 15% of the total female U.S. population. Statistics show that women living in the U.S. between 12 and 25 buy, on average, 0.12 pairs of figure skates per year.

Production and Cost Information: Initial investment to expand the production facility with equipment is estimated at $3,000,000, and the company requires $145,000 for general overhead expenses. Serena estimates that the company will need to spend $550,000 on advertising to promote the Opal500 figure skates in the first year, which will be used for billboards, radio, and print advertising. Serena expects 15% of the retail price to go for labor costs, 20% of the retail price for raw material and packaging expenses, 5% of the retail price will be for factory operating costs, and 5% of the retail price for transportation expenses. Finally, Riedell Shoe Inc. decides to first start selling the Opal500 through a distributor rather than directly to retailers. The distributor expects margins of 20% while retailers look for 25% margins on figure skates.

Test market: Riedell Shoe Inc. tested the potential success of the Opal500 in a smaller market before launching nationwide in the U.S. Serena chose to test the skates in a Northern U.S. city with a population of 1,200,000 (you can assume that the demographic characteristics and consumption habits in this test market are similar to those reported in “The market” section above). She tested the Opal500 for a total of seven months. For the first three months, the Opal500 were sold at the original retail price of $160. However, during the next four months a promotion was run and all Opal500 skates were reduced by 15% from the original retail pricing. In the first three months, sales reached a total of 393 units. During the next four months, the number of units sold was 704 units. As you might expect, the Opal500 sales promotion did not only influence its own sales but also the sales of two other products, the Elektra Snowshoes for women, and the Andalucia Skating dress (see table below):

Retail Selling price	A
Retail Variable cost	B
Retail Markup (in $)	C
Retail Markup (in %)	D
Distributor Selling Price	E
Distributor Variable cost	F
Distributor Margin (in $)	G
Distributor Margin (in %)	H
Manuf. Selling Price	I
Manuf. Variable cost	J
Manuf. Margin (in $)	K
Manuf. Margin (in %)	L

Answer rating: 100% (QA)

Based on the information provided we can calculate the following for the Opal500 figure skates Target market size 50 of the US population is female an... View the full answer