Allround Brands



This week we were instructed to blog about the Market Share Simulation and were asked a few specific questions pertaining to our findings.  I chose to answer the questions: What price for Allround gives you the most profit? and  What price for Allround will maximize sales revenue?

 

After going through the simulation a few times, changing only prices, I have noticed when the price was below $5.49, the company's saw a decrease in revenue, Gross Margin, and Net Income.  For instance when I lowered the price from $5.49 to $5.43,  Allround saw a decrease in Revenue by 2.3%, Gross Margin by 2.9% and Net Income by 9.6.   However, when I included changes in Sales Force decisions, and Advertising Decisions; allocating a higher percentage for product reminder, while changing the price to $5.40, there was a 1.0% growth in Revenue, Gross Margin growth of 1.3 % and a 3.3% growth in Net Income; but this still did not maximize sales revenue and units sold.  At that point I decided to leave the changes made to Sales Force decisions, and Advertising Decisions and just change the prices. The results are determined as follows:

$4.98 Net Income of  $42.3m or 20.0%

$5.43 Net Income of  $38.3m or 18.5%

$5.38 Net Income of  $34.6m or 17.9%

$5.28 Net Income of  $30.7m or 16.4%

$5.20 Net Income of  $23.6m or 13.3%

$5.40 Net Income of  $24.4m or 13.6%

 

Per the Simulation, when MSRP is set at $4.98, Allround yield the most profit, with a Net Income of  $42.3m or 20.0%, a Gross Margin of $124.5m or 8.9% and Unit Sales of $60.6m.  It is very clear from the data provided that when the price of the product is $4.98 the company will yield a high percentage in sales revenue.