In order to be the one and only agent to market the products , the marketing company will have to invest millions of Ringgit and good facilities and large marketing network for distribution of the products.
10% of the cost is spent on advertisement.
40% is mark up on its cost including warehousing, trucking , inventory, bank credits and profit .
There are 13 states in Malaysia, the marketing company appoint its sole agents in each state. Some states are too big to cover and there will be regional distributors and then the whole saler , the retailer and finally to the end user-the consumer ( like you and me)
Take a calculator and follow the chart multiply the percentage and added up the cost and see what you get, from manufacturer till the consumer. If you think the mark up % on each level are too high and not reasonable ,for example, the advertisement cost can be less 5%, the marketing company can make profit with mark up of 30% , or the sole agency and regional distributor should be one level only. Well, go ahead put the mark up % on each level and calculate again and compare to CNM method.
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