effort on the Branded Sales Forecast screen. You are not committed in any way to stick with the marketing
entries made on the sales forecast screen. Indeed, the marketing decision entries that appear on this
screen are again connected to the corresponding entries on the Branded Sales Forecast screen, such that
a change in any of the 6 entries on either screen is immediately duplicated on the other. This
interconnection helps synchronize your branded sales forecast with your decision entries and allows new
entries for these 6 marketing decisions to immediately result in an updated wholesale demand forecast of
the pairs retailers are likely to order—updated forecast numbers and projections of the associated
inventory surplus/shortage are provided just below the boxes for the 6 decision entries for each region. By
all means, experiment with different marketing decision entries and try to discover a combination with the
most appealing performance projections. Should the most appealing combination also entail projected
inventory surplus/shortage numbers that are not to your liking, then simply return to the branded production
and shipping screens and make adjustments in production volume and/or shipping so as to end up with a
more desirable projected year-end inventory.
You’ll have little difficulty in grasping what is involved in making the 6 entries on this screen, and you can
always click the Help button for added information about each entry. But there are several factors to keep
in mind in deciding upon what level of sales and marketing effort to employ:
• How the wholesale price of your company’s branded footwear in a given region compares to the
industry-average price in that region has a major bearing on wholesale sales in retail outlets and your
company’s branded market share in that region. You can see the projected effect on unit sales of a
change in wholesale price by observing the changes in the on-screen projections of wholesale demand
and wholesale market share when you enter a higher or lower price. While lower wholesale prices
tend to boost retail sales of your company’s footwear (assuming other competitive effort factors are not
reduced), lower prices can narrow profit margins and lead to a decline in total profit (because the gain
in revenue attributable to a higher unit volume is insufficient to overcome the revenue erosion
associated with a lower price on all units sold). The on-screen revenue-cost-profit projections provide
instant feedback on the impacts of higher/lower wholesale prices.
• If your company’s advertising exceeds the industry-average amount of advertising in a geographic
region, then your company will enjoy a competitive edge over rivals on advertising in that region—a
condition that boosts branded sales and market share. If your company’s ad expenditures are below
the industry-average, then your company is at a competitive disadvantage on advertising and will sell
fewer pairs than would be the case at higher advertising levels (assuming your company’s competitive
effort on all the other factors remains the same).
• Offering mail-in rebates to consumers who purchase your company’s athletic footwear at retail outlets
is a way to differentiate your product offering from rivals and create added buyer appeal. If you elect to
employ mail-in rebates, you have ten options ranging from as little as a $1 per pair mail-in rebate to as
much as $10 per pair. All rebate offers must be in round dollars. Not using mail-in rebates is
always an option. Different rebates can be used in each region. Customer response to rebates is a
function of (1) the size of the rebate—rebates in the $8 to $10 range will draw a more than proportional
number of buyers than $3 to $5 rebates and (2) the amount by which your company's rebate is
above/below the average rebate in that geographic region. Some buyers lose the coupon or the sales
receipt and other buyers, for various reasons, fail to send in the coupon to get their money. Studies
show that 15% of the buyers mail in the $1 rebate coupons; 20% mail in the $2 coupon; 25% redeem
the $3 coupon; and so on up to 60% for the $10 coupon. Buyer failure to mail in the rebate coupon
means that the per pair cost of a rebate is below the face value of the coupon, as shown in the
following table: