Jams sneakers company enters the market, and upon analysis, determines that they

Question

Jams sneakers company enters the market, and upon analysis, determines that they need a 25% share of voice to break through the clutter of existing advertising. If their analysis determines that three competitors in the market are spending $30 million, $20 million and $40 million dollars, how much must Jams spend? A. $25 million b. $30 million c. $22.5 million d. $40 million e. None of the above Jams sneakers company enters the market, and upon analysis, determines that they need a 25% share of voice to break through the clutter of existing advertising. If their analysis determines that three competitors in the market are spending $30 million, $20 million and $40 million dollars, how much must Jams spend? A. $25 million b. $30 million c. $22.5 million d. $40 million e. None of the above

Explanation / Answer

Jams Sneakers Company needs a 25% share of voice to break through the clutter of existing advertising

And an analysis determines that three competitors in the market are spending $30 million, $20 million and $40 million dollars.

Total spending of the competitors in the market = $30 million + $20 million + $40 million = $ 90 million

Total shares of competitors = 1- Jams Sneakers Company’s share

= 1- 25% = 1- 0.25 = 0.75 or 75%

Now for 75% of market share, competitors are spending $90 million

Therefore for 100% of market shares, total spending = $90 million / 0.75 = $120 million

Therefore for 25% of market shares, Jams Sneakers Company’s spending

= Total spending * Jams Sneakers Company required market share

= $120 million *25%

= $ 30 million

Jams must spend $30 million.

Therefore correct answer is option b. $30 million

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