Question

Beetle's product manager is under pressure to increase market share, but is uncertain about how to make the product more competitive. The product is reasonably well-positioned in the Thrift segment and enjoys relatively high awareness and accessibility. Which of the following would most likely result in a quick increase in market share? Select: 1 A) Increase awareness by 5% B) Increase the unit contribution margin by decreasing the MTBF C) Lower the unit selling price to the bottom limit of the segment price range D) Re-position the product to the ideal spot within the segment

Answer 1

Answer:

B) Increase the unit contribution margin by decreasing the MTBF

Explanation:

Since Beetle is already competitive in terms of awareness and price, it would be unnecessary to decrease the price or increase awareness, as it could even result in a financial loss.

By decreasing the MTBF (mean time between failures), the company's operations become a lot more efficient. That results in the faster coverage of fixed costs.

The unit contribution margin shows us the share of the product unit price that is aimed to cover fixed costs (it is not consumed by variable costs). Therefore, decreasing the MTBF would improve the unit contribution margin and thus propel a more efficient operating system, where more products will be produced and more profit will be generated with each item sold.