Part a only ill and Analysis :(24 points) SIS: A. (16 points) In reality sometim
ID: 1129961 • Letter: P
Question
Part a onlyill and Analysis :(24 points) SIS: A. (16 points) In reality sometimes a manufacturer may find it's hard to induce its retailers to make more or better sales efforts. For example, Toyota's dealers in NYC may be unwilling to make enough monetary contribution to the advertising campaign of its new car model. Al) List the main reasons why the retailers may be unwilling to make more or better sales efforts. A2) Explain each reason you listed above in detail. A3) Provide one practical solution to each reason you listed above. B. (8 points) In the airline industry, airline companies usually share many common flying routes. For instance, in 1998 Northwestern and Delta appeared jointly in 323 common
Explanation / Answer
A.1 The retailers might be unwilling to make more or better sales efforts because
1. It leads to increase in the cost of the firms.
2. Since, the impact of the advertising may not be felt initially, thus, cost benefit analysis of advertising will lead to increase in cost of the firm as compared to benefit of the firm and thus net worth declines.
A.2 Considering increase in the cost of the firm, advertising will add to the total cost of the firm . This increase in total cost vis a vis total revenue of the firm will reduce profits of the firm and this will lead to less money being spent on advertising by the firm.
Also, cost benefit analysis in the initial years will depict fall in the net worth of the company and thus will reduce motivation to spend on advertising campaign.
A.3 In order to overcome these problems, the best possible solution is manufacturers providing advertising material to the firms initially with the launch of the new car model. This will improve visibility, uniformity of the campaign and also bulk manufacture of the advertising material will lead to economies of scale which will reduce total average cost and thus reduce overall total cost and improve profits of the firm.