This section is created to see the financial aspect of the marketing plan. We will consider break-even analysis, sales forecasts, expense forecast in order to meet the marketing strategy.
Break-even analysis determines the point at which revenue received equals the costs associated with receiving the revenue. Break-even analysis calculates what is known as a margin of safety, the amount that revenues exceed the break-even point. This is the amount that revenues can fall while still staying above the break-even point.
Expense forecasts are mostly for staff required to do the marketing activities such as advertisements, web site developments, providing printed materials.
4.1 Break-Even Analysis
The break-even analysis for iLoveMyWater shows that $6,928 will be required in monthly sales revenue or 347 units (Table 4.1) to reach the break-even point where profits equal zero.
TABLE 4.1Break-Even Analysis
Break - Even Analysis Parameters
Monthly Units Break-Even 347 units
Monthly Sales Break-Even $6,927.59
Per Unit Average Revenue $19.99
Per Unit Variable Cost $3.60
Estimated Monthly Fixed Cost $5,680.00
We computed these break-even parameters based on assumptions on variable costs, fixed costs (Table 4.1) and used the following formula:
Price x Units – Variable Cost x Units – Fixed costs = Profit; or
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In order to meet the marketing plan’s objectives, iLoveMyWater needs to monitor and report about its performance metrics such as amount of revenue, marketing expenses, customer satisfactions, customer retention rate, and new-product development. These metrics need to be monitored not only annually but also monthly, especially revenues and expenses. The company should execute a top-to-bottom quality management approach in order to have high costumer satisfaction and also have high costumer retention rate. Lastly, iLoveMyWater contently has to control and improve the quality of their
Table C projects the break even analysis in both units and dollars as a basis for further projections. As seen in Table C substantially larger sales are required to break even.
With this information, Dr. Molloy can now determine the volume of physicals that MEHS must conduct in order to begin making a profit. Again from Chapter 16, the formula to calculate the break-even volume is:
[6] Colin Drury, Management and Costing Accounting, (7th edition), Chapter 8, Cost-volume-profit analysis, p. 165-173
There are two solutions that provide the optimal profit given the current constraints under which JP Molasses operates. Under these conditions, the optimal profit is $63,571. This profit margin is achieved in both cases with revenue of $942,354 and cost of $412,333 for material purchased and $466,450 for fixed and variable costs in processing, for total cost of $878,783.
About $25.77 million dollars will be needed to break even. Since the total sales from 1997 were $287 million, there would need to be an increase of 8.98% in sales to breakeven. Looking at the domestic sales from 1997, it equaled to $191.3 million, therefore, an increase of 13.47% would be needed to
Recently I watched a T.V. show called The Profit and recognized some similarities from the current Marketing chapter discussed in class. The current episode was about a company called Bentley’s Corner Barkery, which is committed in providing all-natural pet food and treats for their customers. The episode highlighted how Bentley’s Corner Barkery was struggling and not reaching all of their potential customer base because of its marketing structure among other poor managing and financial elements. Before Marcus Lemonis (he is the investor) the company marketing strategy was the quality of product will attract customers. Marcus Lemonis immediately ask for the company’s mission statement and help the owners identify their target customers by segmentation.
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Company: Aqualisa, 3rd in the shower market with 18% coverage has had a successful marketing strategy, which allowed it to enjoy 25% net return on sales and a growth of 5% to 10% in a mature market. They have effectively segmented their markets and have products that cater to each segment's needs (product range of 9 models covering the three types of showers used in the UK, ranging between 230 and 670). Their channel relationships are strong and positioning has helped them achieve a good brand name in the market. The company used the shower max (specialized product similar to Aqualvalve at lower priced than the before mentioned) to penetrate the developer's market.
Marketing In this day and age is vital for a company to perform at its possible best. Marketing’s main focus is to give great satisfaction to a customer. There are many aspect of marketing, these aspects give marketer’s the tools to help strive for the best possible success they can achieve. They hope that they can create exposure for their brand, product or service.
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Firstly, in assessing ourselves, we determined that our BATNA associated with $37 million. I comprised the cost of building a new plant ($25 million), loss of profits in 12 months ($12 million) and the cost of 90 day option to buy land ($0.5 million). A non-refundable expense of $10 million on buying the option for the land is considered the sunk cost. The maximum amount of money that our group could spend on this buying intention is $40 million. We decided that our target point would be $16 m...
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