Imus Brothers Coffee, Distributed by Fred and His Radio Disc

question 69

Essay

Imus Brothers Coffee, distributed by Fred and his radio disc jockey brother Don Imus' mail order company, makes ground coffee and has targeted heavy users in the past. However, it is considering switching to college students. It is considering switching target segments even though this group is comprised largely of people who have just started to drink coffee and don't consume anywhere near as much as the heavy users. What are the disadvantages of the heavy-user strategy? What is the term used to describe the college students the company is considering targeting? What are the advantages of targeting this college student segment?

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Definitions:

Property Taxes

Taxes levied by local governments based on the assessed value of property, including land and buildings owned.

Contribution Margin

The amount remaining from sales revenue after variable expenses have been deducted, indicating how much contributes to covering the fixed costs.

Break-even Sales

The amount of revenue needed to cover both fixed and variable costs, resulting in no profit or loss.

Variable Cost

Costs that change in proportion to the level of goods or services produced, such as materials and labor directly involved in production.