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MR. KEN. KONAFO

BA484-MARKETING
FOR ENGINEERS
Assignment 1
1. Why is target marketing so important for a firm with limited resources?
In order to determine and also efficiently and effectively meet the specific
demands of consumers without any excessive loss in production and sales

2. Explain a strategy that a marketer can use to adjust to a recession.

Putting the core consumer needs a first priority rather than large budget cuts is a
useful strategy to use to adjust to a recession.
Firstly the types of consumers and what they’ll eliminate in their spending during
the recession period will be studied and categorized and also categorize the type
of consumable that they would spend on. The consumables can be categorized
into four categories including Essentials, Treats, Postponables, and
Expendables. During the recession period, customers usually spend more on
essentials such as food and services. To survive this recession, a firm must
eliminate poor performers and low yielding marketing strategies and come up
with solutions for this situation such as, using target marketing and increase the
trust of consumer in a brand, or promoting your brand allowing the firm to create
essential products for customers.

3. Using the cost based pricing method, work out the unit cost of a jug supposing
that the producer had the following costs and expected sales: variable costs
K10.00, Fixed costs K300000 and Expected sales 50,000 units

𝐹𝑖𝑥𝑒𝑑 𝐶𝑜𝑠𝑡
𝐵𝑟𝑒𝑎𝑘 𝑒𝑣𝑒𝑛 𝑞𝑢𝑎𝑛𝑡𝑖𝑡𝑦 =
𝑆𝑒𝑙𝑙𝑖𝑛𝑔 𝑝𝑟𝑖𝑐𝑒 𝑝𝑒𝑟 𝑢𝑛𝑖𝑡 − 𝑉𝑎𝑟𝑖𝑎𝑏𝑙𝑒 𝐶𝑜𝑠𝑡 𝑝𝑒𝑟 𝑢𝑛𝑖𝑡
𝐹𝐶
𝐵𝐸𝑄 =
𝑠−𝑣
𝐾300,000
50000 𝑢𝑛𝑖𝑡𝑠 =
𝑠 − 𝐾10/𝑢𝑛𝑖𝑡
𝑠 = 𝐾16/𝑢𝑛𝑖𝑡

4. Discuss the important role of opinion leaders in analyzing market opportunities

Opinion leaders play an important role in marketing by influencing consumers in
purchasing a particular product or using a service. They do this by providing a
physical sense to the marketing strategies already being used by a company.
This is an effective way of marketing where there are no investment cost
associated with it. This strategy can showcase brands that are not well known
and influence many people into buying the company’s product depending on the
opinion leaders

5. Case Study
Mid-Texas Helicopter
 Questions
a. If we assume that Mr Berke intends to add 10 percent of expenses for profit,
what is the lowest price that he should charge for each hour of helicopter
service? What price should he actually charge and why?

Fixed Costs per Month Amount $

Withdrawal 600
Rental on Helicopter including Insurance 600
Rental for Office and Hanger 300
Advertising Expenses 100
Office Expenses 100
Total Fixed Cost 1700

Variable Cost per Hour Amount $

Aviation fuel 4.20
Helicopter Use 4.00
Oil 0.50
Repairs 0.35
Total Variable Cost 9.05
Total Variable Cost for 120 hours (1 1086
Month Operating Time)

𝐹𝑖𝑥𝑒𝑑 𝐶𝑜𝑠𝑡
𝐵𝑟𝑒𝑎𝑘 𝑒𝑣𝑒𝑛 𝑞𝑢𝑎𝑛𝑡𝑖𝑡𝑦 =
𝑆𝑒𝑙𝑙𝑖𝑛𝑔 𝑝𝑟𝑖𝑐𝑒/𝑢𝑛𝑖𝑡 − 𝑉𝑎𝑟𝑖𝑎𝑏𝑙𝑒 𝐶𝑜𝑠𝑡/𝑢𝑛𝑖𝑡
𝐹𝐶
𝐵𝐸𝑄 =
𝑠−𝑣
$1700/𝑚𝑜𝑛𝑡ℎ
120 ℎ𝑜𝑢𝑟𝑠 =
𝑠 − $9.05/ℎ𝑜𝑢𝑟
𝑅𝑎𝑡𝑒 𝑜𝑓 𝑠𝑒𝑟𝑣𝑖𝑐𝑒, 𝑠 = $23.22/ℎ𝑜𝑢𝑟

Assuming 10% of expenses for profit:

𝑇𝑜𝑡𝑎𝑙 𝐶𝑜𝑠𝑡 = 𝑇𝑜𝑡𝑎𝑙 𝐹𝑖𝑥𝑒𝑑 𝐶𝑜𝑠𝑡 + 𝑇𝑜𝑡𝑎𝑙 𝑉𝑎𝑟𝑖𝑎𝑏𝑙𝑒 𝐶𝑜𝑠𝑡
𝑇𝑜𝑡𝑎𝑙 𝐶𝑜𝑠𝑡 = $1700 + $1086 = $2786
10% 𝑜𝑓 𝑒𝑥𝑝𝑒𝑛𝑠𝑒𝑠−→ $2786 × 10% = $278.6 𝑚𝑎𝑟𝑘𝑢𝑝
𝐴𝑐𝑡𝑢𝑎𝑙 𝑃𝑟𝑖𝑐𝑒 𝑎𝑓𝑡𝑒𝑟 𝑀𝑎𝑟𝑘𝑢𝑝 = $2786 + $278.6 = $3064.6
𝑃𝑟𝑜𝑓𝑖𝑡 = $3064.6 − $2786 = $278.6

$278 = 𝑅𝑎𝑡𝑒 𝑜𝑓 𝐶ℎ𝑎𝑟𝑔𝑒 × 120 ℎ𝑜𝑢𝑟𝑠 − (𝐾1700 + 𝐾9.05 × 120)

𝑅𝑎𝑡𝑒 𝑜𝑓 𝐶ℎ𝑎𝑟𝑔𝑒 = $25.53/ℎ𝑜𝑢𝑟

$23.22/hour is the lowest price for the helicopter service without making any
losses.
 $25.53/hour should be the actual price considering the 10% of expenses for
profit. This rate produces more profit monthly as compared to the previous
charge

b. Prepare a profit graph on the basis of at least two other prices than the one
above. For each assumed price, when would Mr Berke begin to make a profit?

12000

10000

8000
Amount $

6000

4000

2000

0
0 1 2 3
Operating Months

Fixed Cost Variable Cost Total Cost Sales

Profit Graph for rate of $32.00/hour. The breakeven point is reached in

74.07hours of operation

14000
12000
10000
Amount $

8000
6000
4000
2000
0
0 1 2 3
Operating Months

Fixed Cost Variable Cost Total Cost Sales

Profit Graph for rate of $29.00/hour. The breakeven point is reached in 65.51
hours of operation.