In the eve of opening schools companies bring about different product promotion strategies to attract as many students to their retailer outlets as possible. It is common for companies to strategize on using discount as a method of winning customers. Students are always in dilemma on choosing the company which fits their financial needs. For example, it is common to find one company offering a constant discount for each dollar spent while another one offering no discount for dollars spent below certain amount but a higher discount for each dollar spent beyond the given threshold .
A student faced with two situations whereby he can choose either to purchase from company A where he will get flat discount for every dollar spent or from company B where there is a higher discount. However, choosing to purchase from company B where the discount is higher he must spent at least a given amount of dollars to qualify for the given discount. This may make the student get confused when trying to know which company is likely to fit well with both his financial and non financial needs.
In making purchasing decision, the student has several non financial issues to consider before deciding to purchase from either company A or company B. this is because both companies will not give him a hint on how he may benefit non- financially. Thus he must consider: the quality of items he is going to purchase, any warranty offered on the items, and probably the likely wood of meeting friends and interacting. Interaction with others is a non financial benefit which many people all over the world may overlook however, it contributes so much to persons well being. It is worth noting, that as one grows he learns a lot from peers and meeting your friend to share ideas on the items to purchase may make one make a better choice. However, it may not necessarily lead to a better choice in certain instances but it is common that teenagers and young adults seek for approval from peers before making a decision. Therefore, more satisfaction will be derived on purchasing alongside ones friends than going shopping alone.
On the other hand there are several financial benefits which form the base line of making the decision to purchase from either of the companies. First and foremost, he should consider the distance he will travel to the company because in some cases he may need to pay some fare or even fuel a vehicle. Lastly, he should consider the amount of money available to purchase the required items.
Assume that the student has 200 dollars to spend. In addition, assume that company A offers a eleven percent (11%). Therefore, if the student makes the purchase he will get a discount of 11 % *200 =22 dollars. On the other hand, assume that company B offers 16% discount for any dollar purchased above 75 dollars. Therefore if the student has the same amount of money available for spending i.e. 200 dollars he will get a discount of 16%*( 200-75)=20 dollars. Meaning company A is better than B for a student with 200 dollars to spend. However if the student had 300 dollars to spend then he was could enjoy a discount of 11 % * 300 =33 dollars in company A and 16 % * (300-75) = 36 in company B. This means that, as the money to be spend increases the discount becomes more attractive in company B I.e., it is financially wise to purchase from company B if the money to be spent is sizeable.
It is possible to think critically and develop two equations to solve the above problem so as know which option is suitable in according to the amount of money to be spent. Remember that in these equations only financial benefit will be considered because it is difficult to quantify the non financial benefits in monetary terms. Assume the amount of money available for spending is X and discount is Y. in addition, let the discount offered by company A be 11% of the money spent while that offered by company B be 16% with a required minimum spending of 75 dollars. Therefore, if the purchase is made from company A the discount equation will be Y=11%*X. this can simply be written as Y=0.11X. On the other hand, the amount of discount received upon purchase from company B is given by Y=16 % *(X-75). The second equation can be simplified by expanding brackets to get Y=16% *X- 16%*75. It can be simplified further to get Y=0.16 X- 12.
The second one y=0.16x-12 can be represented in the below graph
It is therefore possible for the student to know which discount is more if the amount to be spent is given. For example, if the student whishes to spend 300 dollars the amount of discount received from company A is 30 dollars while that received from company B is 36 dollars.
The graphs show that it is recommendable to purchase from company B only when you have above 240 dollars. This can also be obtained by solving the two equations simultaneously as shown below.
Y=0.11x..(1)
Y=0.16x-12.(2)
Solve them simultaneously by substitution method
0.16x-12=0.11x
Group like terms together
0.05x=120
Then divide both sides by 0.05, this will lead to the values of x.
X=240 dollars.
This can also be obtained by solving the equations graphically which is easy got by drawing the two situations on one graph. In the below graph y axis represents discount while x axis represents the money to be spend.
Series 2 represents the equation y=0.16x-75
Linear y represents the equation y=0.11x
The two lines meet at (240,26.5) this is the graphical solution of the simultaneous equation i.e x=240 dollars while y=26.5 dollars
Therefore it is better for a student with 200 dollars to spend his money in company A than in company B. The graph above is showing that company A is offering a higher discount than company B when X=200.
