In most societies, resources are allocated by

In most societies, resources are allocated by the combined action of millions of households and firms.
Resources are very important to setup and build societies. Resources are scare and this is the reason why societies and households faces many decisions. How societies manage scare resources, we study this in economics.

Complete Question:

Check the attached files for a well formatted question in word format

Answer and explanation:

1. Looking at the market segment profiles, which segment would you target? Note: Assume you only have the resources to target one of the segments for now. Explain your reasoning.    

A- Golden years companion group are welling to buy the product because they have high income and they have the highest percentage of households in the U.S owning a dog ( 30%)

2. Calculate the market potential for the product in terms of units sold. To do this, you will have to make some decisions about targeting of segment(s), what numbers to use, etc. Please clearly explain your reasoning and your calculations. Note: At the end, you should have an estimated value that you believe reasonably characterizes the market potential for your product.            

A- 40,000,000 the total population but I need to exclude 20% working dog because the dogs live outside, and less attach to the owner. Also, exclude 12% from child substitute group because not all of the owner willing to buy expensive leash but some of the owner (13%) maybe willing to try a new innovation because they have high level of attention to their dogs. Moreover, exclude 20% from the family dog because the owners have low attention to their dog but some owners (10%) maybe will try the new leash. Additionally , I will exclude 20% from owners who believe that there is no solution to pulling leash problem. 40,000,000* ( 20% x12% x20% x20%) = 38,400 the number of people welling to buy the leash

3. What are the fixed costs? Note: Fixed costs are those that remain the same regardless of how many units are produced.

Fixed price = $25,000 +$100,000 + $75,000 + $10,000 = $210,000

4. What are the variable costs per unit produced? Note: Variable costs are those that depend on the number of units produced.

$12 per unit

5. What is the breakeven quantity for the product? What is the breakeven revenue? Show your calculations. Assume that you will be selling the product primarily through a retailer.

Break even number of unit = Fixed cost/ ( sales price per unit- Variable cost per unit)

= 210,000/ ( 19 -12)

=30,000 unit

Break even revenue = Sales price per unit x Break even unit

                                           = $19 per unit x 30,000

= $570,000

6. Given your market potential and break even calculations, do you believe that moving forward with bringing the product to market is a good decision? Explain.

Yes , bringing the products to the market is a good decision because the break-even revenue shows that selling the products at $19 per unit will cover the fixed prices of the product and the company still making a profit ( 570,000- 210,000= $360,000 ) . Also, the potential market shows that there are 38,000             people willing to buy the product so the company can sell more than the break-even unit which is 30,000 units.

7. You’ve always dreamed of making your first million dollars. Calculate the number of units you need to sell to make $1,000,000 in profit.

                       # Unit to achieve desired profit = {Desired profit/ Contribution Margin per unit} + Break even # of unit

                                                                       = {1,000,000/ 7}+ 30,000

                                                                       =172,857 unit.

Stretch Question

8. Imagine that you’ve been offered deals by two of the Piranhas. One piranha, named Mark Dominican, offers you an investment of $100,000 in exchange for 20% ownership of your company. Another piranha, named Daymond Jim, has offered you $100,000 in exchange for a $1 royalty paid to him for each unit sold for the life of the product.

Which offer would you choose? Explain

I will choose the second offer which is paying 1$ for each unit sold for the life of the product. However , I need to work hard to improve my unit sale and improve my product to convince more people to buy the product. I refuse the first option because I don’t need to lose control over my product and get shareholder in my company so they start exercise some level of control, influence, or participation in the activities of the company.

Did your market potential and break-even calculations influence this decision? Explain why or why not.

I took my decision because I want to have a full control over my product. Also, my decision gives me a hope that the product will stay on the market for a long time and the market potential gives me an indicate that there are a lot of people willing to buy the product for their dogs.