Question

Leaf's Paper Company is planning to launch a new notebook product that is water resistant. The company wants to sell 30,000,000 of the new notebooks next year and wants to know what trial rate is required to achieve this goal. The market research group forecasts an awareness rate of 78% and an ACV% of 51%. Of those that try the product by purchasing 1 notebook, 21% will repurchase 5 notebooks per year. There are 200,000,000 notebook consumers in the target market. Total fixed costs to Leaf Paper Company to manufacture this new notebook are $11,000,000, with variable costs of $2.56 per notebook. What trial rate is required to achieve the company's goal?

Answer 1

Answer:

7.5%.

Explanation:

This question can be solved by using the formula below;

The trial rate is required to achieve the company's goal = ( number of new notebooks that the company wants to sell the following year) ÷ awareness rate × units per trial × ACV × number in target market.

From the Question above, we have the following information which is going to be slot in to the formula above and use in solving this question;

=> The number of new notebooks that the company wants to sell the following year = 30,000,000.

=> The awareness rate = 78%.

=> ACV% = 51%.

=> The percentage of people that will repurchase 5 notebooks per year = 21%.

=> The total number of notebook consumers in the target market = 200,000,000 .

=>'' The Total fixed costs to Leaf Paper Company to manufacture this new notebook = $11,000,000''

=> The variable costs per Notebook = $2.56.

Thus, slotting in the values respectively, we have;

Trial rate = 30,000,000 ÷ (0.78 × 5 × 0.51 × 200,000,000).

Trial rate = 0.07541478129713423.

Thus, 0.07541478129713423 × 100 = 7.5%.

Trial rate = 7.5%.