Principles Of Marketing
Principles Of Marketing
17th Edition
ISBN: 9780134492513
Author: Kotler, Philip, Armstrong, Gary (gary M.)
Publisher: Pearson Higher Education,
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Please ans these 2 paragraph Since meena hasent advertised very heavily..... Keon is also thinking of expanding from Google to social media....
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After Keon mentions that he has a mechanic friend, Bill, who would be looking at the cars before any
deal was finalized, Meena admits that one of the limos needs a $3,000 repair. She has been considering
selling the vehicle as is and upgrading to an oversized luxury limousine. When Keon asked if she had an
idea how high the as-is price may be, Meena hesitated and said she wasn't sure. Keon described the
issue to Bill and he advised that a $30,000 price was a reasonable in the current market.
Revenue per weeknight, January through December
Revenue per weekend night, January through May
Revenue per weekend night, June through August
Revenue per weekend night, September through December
Operating expense per weeknight
Operating expense per weekend night
Maintenance expense, quarterly
Cleaning expense, weekly
81669
Keon has searched around for oversized limos and he thinks the best approach would be to buy a used
one for $70,000. Keon believes he can generate revenues 33% higher than a regular limo. However, the
cleaning, maintenance, and operating costs of the larger limo would be 25% higher than the smaller
vehicles are currently incurring. Keon wants a detailed cost-volume-profit analysis on the oversized limo,
as he believes there is more opportunity with pricing and business strategy here compared to the
regular limos.
Keon has asked Meena about pricing and costing of the limo services and has made his own plans,
should he acquire the business. In terms of budgeting resources, Keon is planning to use two limos for
regular customers and the other two for non-regulars. Here is a detailed breakdown of non-regular
customer averages for a single limo (weeknights are Monday through Thursday):
G
$190
236
259
241
104
132
320
100
H
Keon can currently borrow up to $150,000 at a 5.50% rate. In addition to the $70,000 in a trading
account, Keon has a $10,000 balance in his checking account. He feels that this money could
comfortably last him three months as his living expenses are quite low.
Since Meena hasn't advertised very heavily (she currently pays $300 a month for advertising on Google
and $150 a month for a small spot in the local paper), Keon is thinking of adding some more aggressive
marketing. He believes that paying for a trio of large billboards around the city could boost annual sales
by 25% (with proportional increases in vehicle costs). Each billboard would have an initial cost of $1,000,
followed by $500 monthly.
Keon is also thinking of expanding from Google to social media. He estimates that if he spends $1,000 a
month on social media, he would be able to increase limo rental prices by 10% and not suffer any drop
in sales volume. However, Keon wants to make sure that his advertising strategy is ethical and tasteful.
He is looking for advice on the best marketing strategy given his industry and his limited budget. Keon
hasn't made a budget yet, but wants help with this as well as advice on performing budgetary analysis in
a small business.
Keon has discussed this business idea with Sheri, a dear friend of his. Sheri has been employed as a limo
driver in the past but is currently working as a Lyft and DoorDash driver. In discussion with Keon, she
grew excited and mentioned she would love to work with him. Since one of the current drivers is
retiring, Keon believes he can hire her on a part-time basis for $20,000 a year. Based on current
numbers (with no driver on salary), this would be a 8% reduction in operating cost for one limo.
However, Keon wants more advice on hiring Sheri on salary versus paying her hourly.
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Transcribed Image Text:52 53 54 55 56 57 58 59 60 61 62 63 64 65 66 67 68 69 70 71 72 73 74 75 76 77 78 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 100 101 102 103 104 105 106 107 108 4G B 21:33 Is с D E F After Keon mentions that he has a mechanic friend, Bill, who would be looking at the cars before any deal was finalized, Meena admits that one of the limos needs a $3,000 repair. She has been considering selling the vehicle as is and upgrading to an oversized luxury limousine. When Keon asked if she had an idea how high the as-is price may be, Meena hesitated and said she wasn't sure. Keon described the issue to Bill and he advised that a $30,000 price was a reasonable in the current market. Revenue per weeknight, January through December Revenue per weekend night, January through May Revenue per weekend night, June through August Revenue per weekend night, September through December Operating expense per weeknight Operating expense per weekend night Maintenance expense, quarterly Cleaning expense, weekly 81669 Keon has searched around for oversized limos and he thinks the best approach would be to buy a used one for $70,000. Keon believes he can generate revenues 33% higher than a regular limo. However, the cleaning, maintenance, and operating costs of the larger limo would be 25% higher than the smaller vehicles are currently incurring. Keon wants a detailed cost-volume-profit analysis on the oversized limo, as he believes there is more opportunity with pricing and business strategy here compared to the regular limos. Keon has asked Meena about pricing and costing of the limo services and has made his own plans, should he acquire the business. In terms of budgeting resources, Keon is planning to use two limos for regular customers and the other two for non-regulars. Here is a detailed breakdown of non-regular customer averages for a single limo (weeknights are Monday through Thursday): G $190 236 259 241 104 132 320 100 H Keon can currently borrow up to $150,000 at a 5.50% rate. In addition to the $70,000 in a trading account, Keon has a $10,000 balance in his checking account. He feels that this money could comfortably last him three months as his living expenses are quite low. Since Meena hasn't advertised very heavily (she currently pays $300 a month for advertising on Google and $150 a month for a small spot in the local paper), Keon is thinking of adding some more aggressive marketing. He believes that paying for a trio of large billboards around the city could boost annual sales by 25% (with proportional increases in vehicle costs). Each billboard would have an initial cost of $1,000, followed by $500 monthly. Keon is also thinking of expanding from Google to social media. He estimates that if he spends $1,000 a month on social media, he would be able to increase limo rental prices by 10% and not suffer any drop in sales volume. However, Keon wants to make sure that his advertising strategy is ethical and tasteful. He is looking for advice on the best marketing strategy given his industry and his limited budget. Keon hasn't made a budget yet, but wants help with this as well as advice on performing budgetary analysis in a small business. Keon has discussed this business idea with Sheri, a dear friend of his. Sheri has been employed as a limo driver in the past but is currently working as a Lyft and DoorDash driver. In discussion with Keon, she grew excited and mentioned she would love to work with him. Since one of the current drivers is retiring, Keon believes he can hire her on a part-time basis for $20,000 a year. Based on current numbers (with no driver on salary), this would be a 8% reduction in operating cost for one limo. However, Keon wants more advice on hiring Sheri on salary versus paying her hourly.
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Group Case: Keon's Limousines
Keon has just graduated from college with a business management degree. Through part-time work and
trading stocks, he has amassed significant savings which he is considering investing in a small business
venture.
Historically, Keon has earned a 9% annual return on his investments, but he realizes that he can't expect
the same results with full-time employment or entrepreneurship. He hopes to earn 5.50% a year going
forward, should he decide to leave $70,000 invested in a relatively safe investment portfolio.
As a result of his trading success, Keon has been offered a job as a junior analyst at a major investment
management firm. The job would pay $60,000 to start, with a promotion expected in a year. At that
point, the salary would increase to $72,000, followed by steady $2,000 increases annually.
Keon, who has always been interested in limousines, has heard about a unique opportunity to purchase
an existing business from a retiring founder. Meena is seeking $200,000 for her business. She owns four
limousines, originally purchased for $80,000 each six years ago.
In addition to the vehicles, Keon would get a list of regular customers from Meena. Keon has some
experience with valuing goodwill (a common accounting term) and he believes that 60 customers
spending an average of $250 per month should be valued at the net present value of the next three
years of cashflows. Keon also believes he can increase the rates of these steady customers by 4% a year
(first increase immediately) without losing any of their business.
In a brief conversation with Keon, Meena mentioned that she is using the straight-line depreciation
method with an estimated life of twenty years and salvage value of $2,000, so $200,000 is really a
bargain. Keon is skeptical about this and wants more details on depreciating luxury cars. He wants
advice on best depreciation practices and the impact different methods can have.
After Keon mentions that he has a mechanic friend, Bill, who would be looking at the cars before any
deal was finalized, Meena admits that one of the limos needs a $3,000 repair. She has been considering
selling the vehicle as is and upgrading to an oversized luxury limousine. When Keon asked if she had an
idea how high the as-is price may be, Meena hesitated and said she wasn't sure. Keon described the
issue to Bill and he advised that a $30,000 price was a reasonable in the current market.
After Keon mentions that he has a mechanic friend, Bill, who would be looking at the cars before any
deal was finalized, Meena admits that one of the limos needs a $3,000 repair. She has been considering
selling the vehicle as is and upgrading to an oversized luxury limousine. When Keon asked if she had an
idea how high the as-is price may be, Meena hesitated and said she wasn't sure. Keon described the
issue to Bill and he advised that a $30.000 price was a reasonable in the current market
H
expand button
Transcribed Image Text:2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 4G B 21:33 Is F 8169 G D Group Case: Keon's Limousines Keon has just graduated from college with a business management degree. Through part-time work and trading stocks, he has amassed significant savings which he is considering investing in a small business venture. Historically, Keon has earned a 9% annual return on his investments, but he realizes that he can't expect the same results with full-time employment or entrepreneurship. He hopes to earn 5.50% a year going forward, should he decide to leave $70,000 invested in a relatively safe investment portfolio. As a result of his trading success, Keon has been offered a job as a junior analyst at a major investment management firm. The job would pay $60,000 to start, with a promotion expected in a year. At that point, the salary would increase to $72,000, followed by steady $2,000 increases annually. Keon, who has always been interested in limousines, has heard about a unique opportunity to purchase an existing business from a retiring founder. Meena is seeking $200,000 for her business. She owns four limousines, originally purchased for $80,000 each six years ago. In addition to the vehicles, Keon would get a list of regular customers from Meena. Keon has some experience with valuing goodwill (a common accounting term) and he believes that 60 customers spending an average of $250 per month should be valued at the net present value of the next three years of cashflows. Keon also believes he can increase the rates of these steady customers by 4% a year (first increase immediately) without losing any of their business. In a brief conversation with Keon, Meena mentioned that she is using the straight-line depreciation method with an estimated life of twenty years and salvage value of $2,000, so $200,000 is really a bargain. Keon is skeptical about this and wants more details on depreciating luxury cars. He wants advice on best depreciation practices and the impact different methods can have. After Keon mentions that he has a mechanic friend, Bill, who would be looking at the cars before any deal was finalized, Meena admits that one of the limos needs a $3,000 repair. She has been considering selling the vehicle as is and upgrading to an oversized luxury limousine. When Keon asked if she had an idea how high the as-is price may be, Meena hesitated and said she wasn't sure. Keon described the issue to Bill and he advised that a $30,000 price was a reasonable in the current market. After Keon mentions that he has a mechanic friend, Bill, who would be looking at the cars before any deal was finalized, Meena admits that one of the limos needs a $3,000 repair. She has been considering selling the vehicle as is and upgrading to an oversized luxury limousine. When Keon asked if she had an idea how high the as-is price may be, Meena hesitated and said she wasn't sure. Keon described the issue to Bill and he advised that a $30.000 price was a reasonable in the current market H
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