Solution of Case YSL Marketing Research

YSL Marketing enquiry is a small solid organizes focus group meetings and mail opinion surveys. The YSLs partner Connie Bachmann has been asked to conduct a survey for Surenex that has the potential to be a evaluated long-run client. And the firm willing to deport YSLs normally poster postering rates.2.0 Answer the question (a)The skillful apostrophize of the Surenex scrap including indirect be and direct represents. Direct address consist of travel cost and cost of conducting surveys. In the case, direct cost means direct charge is ab kayoed $3,000. The victor compensation charges include partner $4,800 and professional staff $4,000. Each of bout receives an allocation of overhead based on professional compensation charges. The data of estimated entireness professional compensation and overhead respectively atomic number 18 $1,600,000 and $496,000. check to OAR= total estimated OH cost/ total estimated professional compensation charges.Overhead calculationEstimated overhead $496,000 Estimated professional compensation $1,600,000 Overhead rate 0.31 Job cost summary of Surenex engagement $ $ Direct charges 3,000 Professional compensation charges Partner salary(40 hours$120) 4,800 Staff salary(100 hours$40) 4,000 8,800 Overhead(0.31$8,800) 2,728 Full cost 14,528Based on above orchestrate OAR is about 0.31. The full cost includes profession charges, direct charges and overhead cost. The expected full cost of the Surenex engagement is about $14,528 ($3,000+$8,800+$2,728).3.0 Answer the question (b)Every research company wants to conduct research at higher costs than the cost of research. The company profit equals to the sales revenue minus the be. YSL marketing research is a small firm that bidding on a job and is considering various costs. The question requires calculate the showtimeest footings that Connie can bill on this engagement without hurting company profit means that what is the lowest charge of YSL.From the question (a) the full cos t $14,528 is not the lowest amount that Connie pay and also is not the variable cost of the job. there are three types of costs. The mixed cost is a cost that carries both the elements of the stock-still and variable costs such as utilities. Fixed costs usually include rent and lease payments. Variable costs change in relation to a companys activities.YSL marketing research is a serve up company not a manufacture company. From the case it is not clearly told which costs are fixed and which costs are variable. So we assume the variable costs are employees salaries, direct charges and administrative expense. According to Sales VC FC = Profit and calculate the company profit.Based on the fact, we must consider opportunity cost. Opportunity cost means that in order to get some things feel to give up the greatest value of some other things. When YSL face Surenex engagement and other jobs, then YSL make decision to assay ane job among these, the highest value of the abandoned opt ion is the opportunity cost of this decision.In this case, on most jobs, YSLs requital is 1.5 times professional compensation. In addition, the company is reimbursed for all out-of-pocket costs ($3,000). If company undertakes the Surenex job, it will break away out on billing $13,200(1.5 x $8,800) some other job and will have to free down another potential client.If YSL annihilate Surenex it can charged 1.5times professional compensation plus out-of-pocket costs of other jobs. In order to avoid hurting profit, the company must cover out of pocket costs ($3,000). Thus, the lowest amount that Connie can bill is $16200 ($13,200+$3,000). The lowest amount that Connie can bill calculationDirect charge 3,000 Partner salary 4,800 Staff salary 4,000 1.5 times professional compensation 8,800 (1.5 x 8,800) 13,200 extreme 16,2004.0 Answer the question (c)This question requires we find out some aspects that we did not consider in introductory analysis. Surenex is a new high-tech company t hat may end up being a voluminous hot company with premium billing opportunities in three to five years. To build cooperation relationship with Surenex is honourable for YSL long development, but also the company need to take a certain risks.From the case, we know on the most jobs, the normal rate is 1.5 times of YSLs compensation. But Connie wants to quote a low allowance since Surenex has cash-flow problems. In other words, the company may give a discount for example 1.4 times fee or lower charge for Surenex. There are two aspects to analysis.In short-term, YSL may loss profit to undertake this engagement and give up bid 1.5 times compensation on other jobs. And YSL need reject other potential clients that may reduce the goodwill of the company. YSL is in high demand it may put down some good opportunities.But YSL may be better off in the long-run, even it setting a relatively low price on the current job. If this engagement success, YSL can get a long-term and fixed income from establish cooperation relationship with Surenex. According to the forecast, Surenex may become a big hot company, there are many advantages for the development of YSL, such as improve company visibility. Therefore, even a price that does not cover salaries and direct charges could be warranted if the prospect for future profit, from working for Surenex, is very high.With a low price to receive the task also has a certain risk such as choose problems. Research agencies often take into consideration a customers financial capacity when they are establishing a price. In the future, when Surenex become a large hot company but YSL not allowed to increases the price because they are already sign the contract the price is fixed. At that time some problems will airlift and indeed break the contract.On the other hand, YSL undertake this engagement with a low price may have effect on the service graphic symbol. In order to ensure the benefit of the company and base on the establish pri ce, the company may reduce expense or costs necessary. So the service quality of the company may decrease to a certain extent.