Essay About Gold Plus Gross Margin And Kodak Customers

Gold Plus Gross Margin: 70%
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Gold Plus
Gross margin: 70%
Retailer margin: 20%
Retail selling price: $3.49
Profit = Gross margin * Selling price
= Gross margin * (Retail selling price – (Retail selling price * Retailer margin))
= 0.7 * (3.49 – (3.49 * 0.2))
= 1.9544 ($)
Funtime
Gross margin: 70% (We assume that the gross margins of Funtime and Gold Plus are
same)
Retailer margin: 20% (We also assume that the retailer margins of Funtime and Gold
Plus are same)
Retail selling price: $2.79
Profit = Gross margin * Selling price
= Gross margin * ( Retail selling price – ( Retail selling price * Retailer margin ) )
= 0.7 * (2.79 – (2.79 * 0.2))
= 1.5624 ($)
Gold Plus Profit / Funtime Profit = 1.9544 / 1.5624 = 1.2508
If 10% of Gold Plus users change their films to Funtime, then 2.508% of the number
of Kodak customers has to be filled with new customers. This number of new customers
occupy 2.508% * (70% / 100%) = 1.7556% of the whole market share. Moreover, the
market share of Fuji and Polaroid is totally 15%. Therefore, if Kodak want to
compensate their loss, 1.7556% / 15% = 0.11704 = 11.704% of Fuji and Polaroids
customers have to change their films to Funtime. Here we just consider these two
companies, because these are the largest companies except Kodak with respect to their
market shares. In addition, we can guess that the customers of the other companies are
quite price-sensitive, because the products that they purchase have lower prices than the
products of Kodak, Fuji and Polaroid, and the price of Funtime can not attract those
people easily. In the Funtime marketing plan, there is no advertising support. Therefore,
Kodak has difficulty in attracting these amounts of new customers.