Project

Strategy 1 '' Budget

Pro

• At $5.99 requires only 43% lift to maintain profit '' could be doable due to size of big box stores’ target market

• Big Box stores are the largest distribution distribution channel making up 50% of total sales volume in CD sales.

• Would allow for easy expansion to the US and oversees via Wal-Mart channel

• No need for extensive marketing as sheer volume of customers would fuel sales.

• Many Wal-Mart shoppers have sons, daughters, grand daughters/sons, therefore are the people that can associate with the artists Casablanca has signed.

• Would likely result in sales growth

• With prices above 6.29$ no sales growth would even be needed, due to higher GM%.

Con

• Big boxes driving prices down '' consumer CD price target range at 2-5$. - $5.99 scenario puts the cd’s at price above average

• If price above average then product is a luxury and sales growth will not be as large, although still likely to occur.

• Walmart continues to drive down prices, therefore will likely further cut into margin in the future.

• Does not deal at all with the issue that current artists are going to go out of style as new generation begins to have kids.

• Going below 5.99 per cd requires huge sales growth to maintain same profits as currently had.

• Ie. At 5.49$, a 624% sales lift is needed '' unlikely to occur.

• Plus, Casablanca is not a monopoly so unlikely to corner the market, and with higher than average prices may not compete with companies liek Disney

• Also the issue of return to vendor (rtv) refund of merchandise that isn’t selling well.

• No option of going to high-end once the low-end route is chosen.

• Appears to be small company... may not be able to keep up with increased sales volume (production capacity)

Strategy 2 '' High End

Con

• May not work due to smaller distribution network

• Luxury products are more affected by market conditions...