...The Note on Marketing Strategy (9-598-061) describes the scope of marketing analysis needed to provide the basis for the development of a marketing strategy and the supporting implementation plan. The type of in-depth understanding of factors described there is often usefully supplemented by numerical analysis; at times, we need relatively complex, computer-supported analysis. At others, a low-tech approach utilizing the proverbial “back of the envelope” and maybe a calculator does the job. This note defines key terms and basic calculations useful in both case analysis and real-life marketing decision-making. To accompany this knowledge, one needs to develop some intuition about which type of numbers to look at when. A program of case studies offering repeated exposure to and practice in these issues is a good mechanism for developing skill in using quantitative analysis to develop and support your argument. Basic Terminology (a) Types of Cost Most of the time, a seller hopes to get a price which more than covers his or her cost. In everyday conversation, we might simply say they are trying to make a profit. We would measure that profit as the difference between the revenues taken in and the costs incurred. It is often useful to make a distinction between two kinds of costs, fixed and variable. We define fixed costs as those that remain at a given level regardless of the amount of the product produced and sold. An example of a fixed cost would be the firm’s...
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...Formulas: 4 Total Cost 4 Contribution Margin 4 Unit Contribution 4 Total Contribution 4 Profit 4 Channel Margins 5 Margins (in %) – Based on Price 5 Mark-Ups (in %) – Based on Costs 5 Example: 5 Moving Up & Down the Value Chain 6 Move “Up” Chain 6 Move “Down” Chain 6 Breakeven Analysis 6 BE (units) 6 BE (dollars of sales) 7 Market Share 7 Dollar Share 7 Unit Share 7 BE MS (Dollars) 7 BE MS (Units) 7 Cannibalization 7 Total Contribution (NP) 7 Net Present Value: Today’s $ v. Next Year’s $ 8 Customer Lifetime Value (CLV) 8 Mkt Strat I: Strategy Formulation, Market Assessment Tools (Frameworks), Porter’s Generic Strategies 9 Dolan’s 5 Cs 9 Porter’s 5 Forces Model 10 BCG Matrix 10 Marketing Strategy II: Segmentation and Positioning 11 S-T-P 11 Consumer Segmentation Variables: 11 Business Segmentation Variables: 11 Characteristics of Effective Segmentation 11 Bases for Segmentation Evaluation 12 Targeting the Markets 12 Pricing 12 Top 3 of 5 Deadly Pricing Sins 12 8 Steps to Better Pricing Decisions 12 Value-Based Pricing 13 Marketing Research 14 Steps in Marketing Research 14 Reliability v. Validity 14 Marketing Channels 15 Value Adding Roles of Intermediaries 15 Channel Conflict and Efficiency 15 Salesforce Management 15 McMurry’s sales representative types: 16 Motivating the Salesforce 16 Simple Salesforce Structures 16 Salesforce Size 17 Brand Management 17 Brand Associations...
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...PROFITABILITY OF HONEY MARKETING ORGANISATIONS IN THE NORTH WEST PROVINCE OF CAMEROON D. Malaa1* ; G. A. Muluh2 ; F. Kamajou2 1* Institute of Agricultural Research for Development (IRAD), Dschang BP 44 Dschang, West Province, Cameroon Tel 237 777 00 69 email: dorothymalaa@yahoo.co.uk 2 Faculty of Economics and Management University of Dschang Cameroon ABSTRACT This study assessed the efficiency of three honey marketing organisations, which emerged at the advent of market liberalisation, in the Bamenda Central, Belo and Elak- Oku Sub-Divisions in the North West Province of Cameroon. This research addresses the question: are honey marketing organisations efficient in their pricing. Two types of honey (white honey and brown fluid honey) are marketed, and the marketing organisations are judged organised and efficient given the marketing functions have been liberalised with little or no state intervention in the honey sub-sector. Honey marketing organisations are profitable with the return of profit margins to total cost equal to or greater than the minimum interest rate of 18%. Whilst it is recommended that actors or stakeholders in this sector should organise workshops/training sessions in processing and marketing to empower themselves, further studies should be focused on the cost of processing techniques. Key Words: Honey, Marketing organisations, Pricing strategy, Profitability, Profit margins. 1. INTRODUC TION ...
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...positive operating margins. It is recommended that Foody consider opening more restaurants commensurate with its capital and management capacity to do so. Certain restaurants in Foody’s portfolio have operating costs that are close enough to sales levels to warrant some concern. These should be addressed on an individual basis. Other factors that were studied suggest that Foody could leverage increases in marketing spending to boost both domestic and foreign (tourist) sales. As the number of tourists are growing each year, Foody can leverage Introduction Foody Inc. is a greater toronto area restaurant conglomerate. Sales forecasts for foody were requested by ZYRRMB Associates. ZYRRMB has analysed data provided by Foody Inc., which includes sales, operating costs, marketing expenditures. ZYRRMB has also been provided and sought out other external factor data such as foreign spending, national income, exchange rates and retail food sales in its analysis. Correlations between factors were sought out and predictions made. Background Foody Inc. has grown from its inception in 1999, when its two initial restaurants were first opened. Today, Foody Inc. operates 8 successful restaurants in the GTA. From inception, Foody Inc. has seen an increase in quarterly gross revenue from 8.8 M$ (2002 Q1) to 13.5 M$ (2014 Q3) with an increase in quarterly operating margin from 4.7 M$ (2002 Q1) to 16.7 M$ (2014 Q2). All of Foody’s restaurants have seen positive operating margins in every quarter...
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...price | | $150.00 | | | $150.00 | Variable Manufacturing Cost per unit | $72.00 | | | $88.00 | | Fixed Manufacturing Cost per unit | $30.00 | | | $15.00 | | Variable Marketing and distribution Cost per unit | $14.00 | | | $14.00 | | Fixed Marketing and distribution Cost per unit | $19.00 | | | $14.50 | | Total Cost per unit | | $135.00 | | | $131.50 | Operating income per unit | | $15.00 | | | $18.50 | Production Rate per day | | 400 units | | | 320 units | Normal annual capacity usage | | 240 days | | | 240 days | Maximum annual capacity | | 300 days | | | 300 days | All unit fixed costs are calculated based on a normal year of 240 working days. When the number of working days exceeds 240,variable manufacturing costs increase by $3.00 per unit in Polly and $8.00 per unit in Maddy. Pam Engines is expected to produce and sell 192,000 generators during the coming year. Wanting to maximize the higher unit profit at Maddy, Pam Engines' production manager has decided to manufacture 96,000 units at each plant. This production plan results in Maddy operating at capacity (320 units per day 300 day) and Polly operating at its normal volume (400 units per day 240 days). Required: 1. Determine the breakeven point for the Polly and Maddy plants in units. (6 marks) Breakeven Point = Fixed Costs/CM | | | | | | | | | | CM = Selling price - Variable Costs | | | | | | Polly at 240 Days | | Maddy at 240 Days...
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...production. To illustrate: • An alliance of beef producers, backgrounding or retaining ownership, generally has knowledge of cattle feeding and the skills to background calves. Marketing Research -• Finding the Best Consultant to Hire Individual members of an ethanol or meatpacking Capturing value occurs through changes in distribution of value in the Food/fiber production chain. These changes are generally efforts to “capture” more of the consumer dollar. Direct marketing, vertical integration, producer alliances and cooperative efforts are often directed toward capturing more of the enduse value of farm production. Following are examples of capturing added value: • Beef producers who join an alliance to market back-grounded calves or retain ownership of animals in the feedlot. • Producers who form cooperatives to build meatpacking or ethanol plants. • Producers who package or market their production directly to consumers. Creating value occurs with actual or perceived value to a customer for a superior product or service. The objective is to create something that has value. New products, enhanced product characteristics, services, brand names or unique customer experiences may create additional value for farm products. Examples of activities for creating added value are: • Marketing unique or branded products. • Producing identity-preserved or specialty crops for value chain participation. • Combining family activities (animal petting, hay...
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...at Polyphonic to get better reach to decision makers at record labels. Offer free trial reports to convince record labels and an initial lower cost for buyers along with discounts for high volumes ordered over a fiscal year. In the long run, promote Human Music Interface as a complement for Hit Song Science to maximize the revenue earning capability of a song (by ensuring better listener penetration) that is marked as a winner by HSS. Rationale: Target segment rationalization: The record labels constitute the segment with the biggest budget (deepest pocket and hence least price sensitive), highest influence in the music industry and positioned to obtain the greatest benefit out of HSS’s accuracy in music selection suggestions. There are initial enthusiasts in this segment who are already impressed with HSS’s capabilities. The market pie can be restricted to the USA (Exhibit 1) Value for the segment: The HSS program will enable record labels to select only those songs for promotion and advertising that has 80% chances of being successful compared to the 10% success rate offered by the tradition ways of selecting a song. Thus, the labels will considerably reduce the amount spent on marketing (Exhibit 2) and as a result will increase profit margins (Exhibit 3). Thus tremendous cost savings and considerable improvement of profit margins are the primary aspects that should be promoted to the record labels. Pricing: Initially price the reports at $7000 per song or 60,000 per album...
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...capital: * Production cost (for trial period and the first run): Cost roughly 82 USD for each Streetsense * Logistic expenditure: Cost roughly 30 USD per package (UPS 2 day shipping service within US) *Specific numbers depend on the future marketing plan * Storage expenditure: 0 if we use the office as a warehouse *Specific numbers depend on the future marketing plan * Outsource part (production, assembling, packaging): Roughly cost 40 USD for each Streetsense(over 10000 set) * Utility fee (only for the office): 2,400 USD per year * Salaries:(after tax) 1 designer 1 product manager 6 engineers 2 marketing staffs 2 sales staffs 1 finance staff 2 after-sales staffs Total amount of salaries is roughly 1260,000 USD per year after tax. * Rent for an office room (based on somewhere, like Chicago): 24,000 USD per year * Physical assets (like a type machine, a fax machine, office phones, etc.): 200 USD * Advertising budget: Roughly set it for 500,000 USD per year Channels: (Using CMP method to calculate) Facebook (60% of the budget): 2 USD per click; Adwords (20% of the budget):1.2 USD per click; Bing(20% of the budget): 0.9USD per click; Criteo(0%) Perfect Audience(0%) LinkedIn(0%) etc. *Specific numbers depend on the future marketing plan Price: (for now) 200 USD for basic version * Sales would be 2000,000 USD Cost would be 3318,600 USD Rough cross margin would be -1318,600 USD (if...
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...industry chain structure industry overview; international market analysis, China domestic market analysis, Macroeconomic environment and economic situation analysis and influence, Functional beverages industry policy and plan, Functional beverages product specification, manufacturing process, product cost structure etc. then statistics Global and China key manufacturers Functional beverages capacity production cost price profit production value gross margin etc details information, at the same time, statistics these manufacturers Functional beverages products customers application capacity market position Activationontact information etc company related information, then collect all these manufacturers data and listed Global and China Functional beverages capacity production capacity market share production market share supply demand shortage import export consumption etc data statistics, and then introduced Global and China Functional beverages 2009-2013 capacity production price cost profit production value gross margin etc information. And also listed Functional beverages upstream raw materials equipments and down stream clients survey analysis and Functional beverages marketing channels industry development trend and proposals. In the end, this report introduced Functional beverages new project SWOT analysis Investment feasibility analysis investment return analysis and also give related research conclusions and development trend analysis of Global and China Functional beverages...
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...getting into the details of full costing. Because in many programs the marketing and management accounting courses begin at the same time, this case also enables the accounting instructor to assist his or her colleagues in marketing by introducing break-even analysis at the start of the term; questions 1 and 4 can be used for this purpose. The case is also useful for giving students a good understanding of the fixed/variable cost dichotomy. In particular, I think it worthwhile to emphasize to students that fixed costs may be "unitized" (i.e., allocated to individual units of product) for certain purposes, and that this allocation procedure may make such costs appear to be variable. Indeed, many students treat the $660 per unit fixed manufacturing overhead and $770 per unit fixed marketing costs as though they were variable costs, despite the fact that they are clearly labeled "fixed." Finally, I use the case to introduce the concept of opportunity cost. Question 3 can be used in this way, as can question 5 if you postulate a scrap value for the obsolete hoists. * This teaching note was prepared by Professor James S. Reece based on solutions prepared by Professor Michael Maher. Copyright © by. James S. Reece. Comments on Questions Question 1 Total fixed costs (TFC) = fixed costs per unit times normal volume =($660 + $770)*3,000 = $4,290,000. Contribution margin per unit = unit price minus unit variable costs = $4,350 - $2,070 = $2,280. Break even volu me $4,290,000 1...
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...AOL was spreading quarterly marketing expenses over two years rather than expensing as incurred. 2. What was AOL’s rationale for using the past accounting approach? What accounting principle(s) was it following? AOL rationale for the past approach was that spreading the marketing costs over two years was a justifiable way to match those expenses with the revenues that would have emerged as a consequence of such expenses. AOL was using the "Matching Principle" thus under the accrual basis of accounting. 3. What do you think is meant by the term the “quality of earnings” (see page two of article, top paragraph). What, in your opinion, would constitute “high” quality earnings? Quality of earnings refers to the way earnings are defined and to what are attributed. High quality earnings are created as a consequence of higher sales or lower costs within a conservative accounting...
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...Percentage Change ......................................................................... 4 Worksheet: Metric 3 Market Share & Market Analytics ............................................. 5 Worksheet: Metric 4 Contribution Margin ...................................................................... 7 Worksheet: Metric 5 Mark-up & Margin........................................................................... 8 Worksheet: Metric 6 Pricing Wholesale to Retail ......................................................... 9 Worksheet: Metric 7 Break-Even ..................................................................................... 10 Worksheet: Metric 8 Return on Marketing Investment (ROMI) ........................... 11 1 of 11 MKT100 - Metrics Mastery Worksheets Worksheet: Metric 1 Expense Types 1) The Comfy Chair Company makes reclining chairs at its plant and sells them exclusively through its own retail store. It has the following expenses: Plant rent and taxes = $12,000.00 Office and management expenses = $220,000.00 Machinery and equipment purchased = $100,000.00 Direct materials = $27.00/chair Direct labour = 4 hours/chair @ $14.00/hour Transportation = $5.00/chair Commercial store front unit purchase = $500,000.00 Advertising costs = $100,000.00 Sales...
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...aga ons ainst program that ms cost m money to imp plement. Befo expenditu ore ures are made managers w e, want to be sur that they w be re will gettin a return on their investm ng n ment; they w want to ensure that the mo e oney will be w spent and will well d lead t incrementa profits for the firm. On way of asssessing this iis by calculatting the break to al ne keven point. The breakev point calc . ven culates the nu umber of incr remental unit the firm ne eds to sell to cover ts the co of the prog ost gram. If the f firm sells less than the brea akeven point volume, then it is losing m n money -- it is not selling eenough to re coup its inve s estment. If th firm sells m he more than th breakeven point he volum then it is m me, making mone -- it is sellin more than enough to co ey ng over its invest tment. Ma anagers use breakeven a nalysis to as ssess the finaancial feasibi lity of markeeting investm ments. Once a breakeven point is calcu ulated, mana agers need to evaluate wh ether it is fea asible that the firm e will b able to sell that quantity of product. be y Ma arketing mannagers use b breakeven a nalysis to a assess many different ty pes of mark keting progr rams. For ex xample, a firm may want tto assess how many increm m w mental units of product it must sell to recoup the o cost o a $10 millio advertising campaign. Or, a firm m of on g may want to a assess how m many increme ental units of product it m must sell to rec coup the cost of a $5 millio sales prom otion...
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...ANSWER SHEET A: Question 1 - What marketing mix and ‘other’ key issues need to be addressed? Complete using charts below, please. Marketing Mix Issues | Proof/evidence from case | Product | Value Added Product * Client turnover and loss related to Canadix Convenience service support and intranet system – This support system is only offered to SME and larger businesses, nothing similar and customized is offered to large retail chains that may benefit from an easier way to order PDA systems to better suit the needs of customers locally therefore increasing sales * Service for PDA systems is provided by CCC certified technician from a third-party service partner that typically provided service for several manufacturers products – These technicians are not loyal to the CCC brand and may not uphold the same quality level of service that an employee working directly for CCC will provide (First time fix 30% below industry average). They may also be working on other repair processes for other manufacturers and the CCC PDA system may not be priority and therefore lengthening repair time. Technicians may have a personal opinion on PDA products and pitch another product to the customer * Average time of 240 hour fix time is much above the industry average of 144 hours – PDA systems are a hefty investment and needed daily, a fix time so much above the industry average will result in frustrated and negative customer feedback and negative word of mouth in the industry the customer...
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...CHAPTER 3 COST–VOLUME–PROFIT ANALYSIS Selected Solutions NOTATION USED IN CHAPTER 3 SOLUTIONS SP: Selling price VCU: Variable cost per unit CMU: Contribution margin per unit FC: Fixed costs TOI: Target operating income 3-16 (10 min.) CVP computations. | | |Variable |Fixed |Total |Operating |Contribution |Contribution | | |Revenues |Costs |Costs |Costs |Income |Margin |Margin % | |a. |$2,200 |$ 800 |$400 |$1,200 |$1,000 |$1,400 |63.64% | |b. |2,400 |1,300 |400 |1,700 |700 |1,100 |45.83% | |c. |900 |500 |400 |900 |0 |400 |44.44% | |d. |1,800 |900 |400 |1,300 |500 |900 |50.00% | 3-17 (10–15 min.) CVP computations. 1a. Sales ($68 per unit × 410,000 units) $27,880,000 Variable costs ($60 per unit × 410,000 units) 24,600,000 Contribution margin $ 3,280,000 1b. Contribution margin (from above) $3,280,000 Fixed costs 1,640,000 Operating income $1,640,000 2a. Sales (from above) $27,880,000 ...
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