Variblo sells its ionic hairdryers to independent hair salons, who typically retail them to their own customers at a markup of about 25% (based on final retail price).  Variblo total fixed costs are currently about $550,000 per year, including an annual promotion budget of $85,000, and unit variable costs of $55 (cost including shipping as purchased from a Chinese manufacturer).  The factory price to the salons is $98 each with the buyer paying shipping and handling costs.  In its first year in business, last year, Variblo sold almost 27,500 units.  In an effort to increase market share, Variblo is considering a sales promotion which would cost Variblo an additional $16,000 across the next 1,200 units.  Should Variblo go ahead with the sales promotion campaign?  Consider qualitative as well as quantitative issues.  Your analysis is to use only the above information and commonly known information about the current marketing environment; you are not to conduct additional research.

As the product manager for the Variblo hair dryer line, write a memo to the vice president of marketing to recommend whether or not you should move ahead with this sales promotion.  Your memo must include the following format, not necessarily with any sort of headings:

1. objectives of this assessment
   (aka problem statement)

2. facts and assumptions that will be used in analysis
   (aka situation analysis)

3. discussion/ assessment of alternative strategies
   (aka alternatives)

4. discussion of the conclusions
   (aka recommendation and implications)

Note that "memo," is used here to mean a brief report; don't include "to" and "from" lines and such.  Appropriate length of the report body is about one single-spaced page.  It is not appropriate to include a cover page with a professional business memo.  All calculations for numbers that are derived from given case information must be clearly shown in your report (either in the body or as an attachment that is referenced).  Your submission must be in one single word processed (.doc) file exclusive of attachments; attachments are strongly discouraged.  If you submit more than one document, I will open only the first document and will assign a score based on whatever is in that document only.  If you submit a document that does not immediately open in MS Word because it has no file extension or submit a document that is not formatted to fit properly on 8.5x11 inch paper (e.g., a business report written using Excel rather than Word), I will assign a score of zero.  Failure to include your name on the document will result in a two letter grade penalty.