The scenario this assignment is based on is entirely hypothetical. Please do not search for accurate numbers and information on the Internet but only use the information provided in the text.



Individual Assignment I – Quantitative Analysis in Marketing

MRKT442 – Marketing Management – Spring 2020


Due Date: February 26, 2020 by 11:59pm (upload on Canvas)


This is an individual assignment. You are not permitted to complete the assignment with the assistance of any other person nor are you permitted to assist any other person in completing the assignment. If you have any questions, you should contact the professor, not other students.


By submitting this assignment, you pledge to have followed this guideline in accordance with The University of Nebraska-Lincoln’s Student Code of Conduct (


Student Name:


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·         The scenario this assignment is based on is entirely hypothetical. Please do not search for accurate numbers and information on the Internet but only use the information provided in the text.

·         Please note that there is a file with practice questions (and solutions) posted on Canvas. I recommend working through these questions before you complete the assignment. All questions on the assignment are based on the methods we covered in class.

·         Show ALL calculations in the space provided. No credit will be given if you do not show your work.

·         You have the option to complete the assignment by hand rather than typing it. Should you choose to do so, please submit the assignment on February 26, 2020 in class or submit a scanned pdf copy through Canvas by the regular due date (Feb. 26, 2020, 11:59pm) 

·         Note: There are no carry over mistakes within questions (only among questions). If the result in a question is wrong, students don’t receive points unless noted otherwise. However, if students use the incorrect result from one question to find the result in a subsequent question (and all calculations were done correctly), they will receive full points for the subsequent question. 


HillTop Hiking Shoes


To stay fit, more and more people are turning to hiking. Hiking requires special shoes that are resistant, waterproof, offer adequate support, and are comfortable throughout the day. Hiking shoes can vary depending on the difficulty of the trail one wants to complete, and range from reinforced walking shoes to professional hiking boots. HillTop is a leading manufacturer of outdoors apparel, and its latest entry level hiking shoes, the “Raw” model, features an innovative sole that allows the foot to breath, while being completely waterproof. The retail price for a pair of “Raw” is $175.


The market: The USA is home to 300 million people. Market research has shown that outdoor enthusiast account for 50% of the population, 40% of which are hikers. However, HillTop’s management knows that not all hikers will be interested in the “Raw” model, since it is an entry level model. For this reason, they decide to target beginner and amateur hikers who make up 15% of the hikers market. Statistics show that beginner and amateur hikers buy, on average, 0.8 pairs of shoes each year.


Production and Cost Information: To create the “Raw”, an initial investment for the product facility was $1,875,000 and HillTop estimates the general overhead expenses at $200,000. To promote it, HillTop will set aside $500,000 for advertising, such as TV ads and billboards and $400,000 on additional fixed promotions in the first year. Management expects 15% of the retail price to account for labour costs, 10% for raw material expenses, while 10% will be for factory operating costs and 5% for transportation expenses (percentages refer to retail price). HillTop has decided to sell the “Raw” model through distributors rather than directly to retailers. Distributors expect margins of 25% while retailers look for 20% margins before selling to customers.



Test market: Before launching nationwide in the US, the management decided to test market the “Raw” model to evaluate its potential success in the hiking shoes market. The test market size is estimated at 1.5 million people in total. Otherwise it has the same characteristics as the U.S. market described above. The test lasted for a total period of 7 months. In the first four months, the “Raw” model was sold at its original retail price. During the following three months, the management decided to run a promotion, selling the “Raw” model at 20% off its original retail price. Sales for the first four months reached a total of 1,600 units*. A total of 1,500 units were sold during the following three months*. HillTop’s decision to introduce the “Raw” model in the test market also influenced the sales of two other products (see table below):


(Climbing Shoes)

(hiking jackets)

Retail Price



Total Units Sold – First 4 months*



Total Units Sold - Last 3 months*



(*assume all sales are evenly distributed during the 7 months)


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