Question

Q:Hearty Snacks Company sells its Paleo-Popcorn product to consumers through a distribution channel that consists of distributors (wholesalers) and retailers. The company has decided to set a margin of 40% on all its products. Retailers’ margins in the industry are typically 40%, and distributors’ margins average 25%. The company wants the retail price of the product to be $10. Answer the questions below.

(a) Given the information provided, fill in the missing numbers in the price chain below:

Retailer’s price to consumers ($)	$10.00
Retailer’s margin (%)
Retailer’s margin ($)
Retailer’s cost ($)
Distributor’s price to retailers ($)
Distributor’s margin (%)
Distributor’s margin ($)
Distributor’s cost ($)
Hearty Snacks price to distributors ($)
Hearty Snacks margin (%)
Hearty Snacks margin ($)
Hearty Snacks cost ($)

(b) Hearty Snacks’ advertising agency has proposed a new marketing campaign, and the CEO is considering raising the company’s margin to 50% in order to fund the campaign. Assuming that their cost (from the previous question) doesn’t change, and that the distributor and retailer margins in the industry remain the same, fill in the missing numbers below and indicate what the new retailer’s price to consumers will be.

Retailer’s price to consumers ($)
Retailer’s margin (%)
Retailer’s margin ($)
Retailer’s cost ($)
Distributor’s price to retailers ($)
Distributor’s margin (%)
Distributor’s margin ($)
Distributor’s cost ($)
Hearty Snacks price to distributors ($)
Hearty Snacks margin (%)	50%
Hearty Snacks margin ($)
Hearty Snacks cost ($)

Answer 1