1. DRQ #5 – September 24, 2009
Aquarius Products, Inc, has just completed development of a new line of skin-care products. Preliminary market research indicates two feasible marketing strategies: (1) creating general consumer acceptance through media advertising or (2) creating distributor acceptance through intensive personal selling. Sales estimates associated with each marketing alternative are as follows:
Media Advertising Strategy Personal Selling Strategy
Probability Sales ($) Profits ($) Probability Sales ($) Profits ($)
, , ,000, ,000
,500, , ,500, ,000
,500, ,250, ,000, ,000,000
(2pts) (a) Assume that the company has a 50 percent profit margin on sales (i.e. profits equal one-half of sales revenue). Fill in the entries under the heading of “Profits” for each strategy.
(6pts) (b) Calculate the weighted average profits for each strategy.
(1pt) (c) The sales figures and the profits figures are typically called __payoffs.
(1pt) (d) The evaluation of these strategies is conducted using a _payoff matrix.