INSTITUTE OF MANAGEMENT TECHNOLOGY HYDERABAD CASE STUDY ON “Classic Knitwear and Guardian

INSTITUTE OF MANAGEMENT TECHNOLOGY HYDERABAD

CASE STUDY ON
“Classic Knitwear and Guardian:A Perfect Fit?”
Submitted by
Submitted to – Dr. Rambalak Yadav
Date – 1st October 2018
Q4.What sales volume to break even on classic’s 2year launch period?

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MARKETING PLAN
Year 1;2 Year 1
Year 2
Displays($100 x 10,000) $1,000,000 $5,00,000 $5,00,000
aDVERtising $1,200,000 $6,00,000 $6,00,000
sales representatives
(3 x 2years x$85,000) $510,000 $255,000 $255,000
licensing fee $100,000 $100,000 –
TOTAL $2,810,000 $1,455,000 $1,355,000Analysis
From exhibit 4:
Year1 Year2
Mfg selling price(MSP) $17.87 $17.87
COGS $10.82 $10.82
Trade promotion
5% of MSP $0.89 $0.89
Advertising allowaness(20% x $17.87 X 10%) $0.36 $0.36
Royalities5% x $17.87 for next year – $0.89
Profit margin
$ $5.80 $4.91
% 32.46% 27.48%
Breakeven analysis
Year one breakeven
1,455,000/$5.80 = 250,862 units
Year two breakeven
1,355,000/$4.91 = 275,967 units
Average profit
$5.80 + $4.91 = $10.71/2 = $5.36
$2,810,000/$5.36 = 524,253 units
Combined year one and two breakeven
250,862+275,967 = 526,829 units