9.2 Marketing Channel Profitability (Figure 9-5)How does the net marketing contribution and marketing ROI change if the business modifies its sales mix to 30% direct sales, 40% agent distributor, and 30% distributor retailer?How does the net marketing contribution and marketing ROI change if the business replaces the direct sales channel with the agent-distributor channel, with a sales mix of 60% agent distributor and 40% distributor retailer? FIGURE 9-5 CHANNEL STRATEGIES AND CHANNEL TRANSACTION PROFITABILITYArea of PerformanceDirectMixedIndirectTotalChannel StrategyDirectAgentWholesalerSales& Dealer& DealerTarget CustomerLargeMediumSmallServedAccountsAccountsBuyersMarketPercent of Sales40%20%40%100%Revenue per Purchase$10,000$3,000$1,000$5,000Retailer Discount20%Wholesale Price$3,000$800Distributor Discount15%15%Sales Agent Commission5%0%Net Price$10,000$2,400$680$4,752Company Sales Commission0%0%0%Transaction Cost5%2%1%Pocket Price$9,500$2,352$673$4,540Cost of Goods Sold$6,000$1,500$500$2,900Percent Margin36.8%36.2%25.7%36.1%Marketing & Sales Expense (%)15.0%8.0%5.0%9.6%Marketing & Sales Expense ($)$1,425$188$34$436Net Marketing Contribution$2,075$664$140$1,204Marketing ROS21.8%28.2%20.8%26.5%Marketing ROI146%353%415%276%

Answered: How does the net marketing contribution…

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9.2 Marketing Channel Profitability (Figure 9-5)

How does the net marketing contribution and marketing ROI change if the business modifies its sales mix to 30% direct sales, 40% agent distributor, and 30% distributor retailer?
How does the net marketing contribution and marketing ROI change if the business replaces the direct sales channel with the agent-distributor channel, with a sales mix of 60% agent distributor and 40% distributor retailer?

FIGURE 9-5 CHANNEL STRATEGIES AND CHANNEL TRANSACTION PROFITABILITY
Area of Performance
Direct
Mixed
Indirect
Total
Channel Strategy
Direct
Agent
Wholesaler
Sales
& Dealer
& Dealer
Target Customer
Large
Medium
Small
Served
Accounts
Accounts
Buyers
Market
Percent of Sales
40%
20%
40%
100%
Revenue per Purchase
$10,000
$3,000
$1,000
$5,000
Retailer Discount
20%
Wholesale Price
$3,000
$800
Distributor Discount
15%
15%
Sales Agent Commission
5%
0%
Net Price
$10,000
$2,400
$680
$4,752
Company Sales Commission
0%
0%
0%
Transaction Cost
5%
2%
1%
Pocket Price
$9,500
$2,352
$673
$4,540
Cost of Goods Sold
$6,000
$1,500
$500
$2,900
Percent Margin
36.8%
36.2%
25.7%
36.1%
Marketing & Sales Expense (%)
15.0%
8.0%
5.0%
9.6%
Marketing & Sales Expense ($)
$1,425
$188
$34
$436
Net Marketing Contribution
$2,075
$664
$140
$1,204
Marketing ROS
21.8%
28.2%
20.8%
26.5%
Marketing ROI
146%
353%
415%
276%

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