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
…show more content…
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:
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.
The 3 percent decline in sales causing a 21 percent decline in profits can be attributed to the identification of the accounting concept of operating leverage. Operating leverage is what business managers apply to boost small changes in revenue into sizable changes in profitability. Fixed cost is the force managers use to attain disproportionate changes between revenue and profitability. Therefore, when all costs are fixed every sales dollar contributes one dollar toward the potential profitability of a project. Once sales dollars cover fixed costs, each additional sales dollar represents pure profit. A small change in sales volume can significantly affect profitability (Edmonds, Tsay, & Olds, 2011). So, therefore, if sales volume increases,
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
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...
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.
The issues in this case revolve around the launch of a mini-oxidation product which will solve global clean water issues. Their filtration unit has already experienced two failures in the launch of this product. Vyas, the business manager of this unit, is convinced that the unit can be turned around by innovativeness. He revives an abandoned oxidation technology and recommends his team to develop a small-scale oxidation system with the capacity of disinfecting waste-water in small batches. While the market analysis of the product proved promising, marketing the product was a tussle and it failed due to defects in the design and lack of interest in the market. Through a three-phased process recommended by Cynthia Jackson, Vyas team was able to come up with a feasible business proposal for the implementation of the product. Both Cynthia and Vyas are tense about accepting the proposal due to its past failures but promising future.
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.
[6] Colin Drury, Management and Costing Accounting, (7th edition), Chapter 8, Cost-volume-profit analysis, p. 165-173
To breakeven, we would have to sell 267,857 units. We plan on selling the Galaxy Note 8 at a price of $499 which is cheaper than our previous phones in the Galaxy Note line. Consumers aren’t going to purchase a new smartphone if the price is going to be in the same range of the Galaxy Note 7. So we are going to be selling the smartphone at a discount. We are using odd-even pricing for the Samsung Galaxy Note 8. It gives a sense to the consumer that they will be purchasing the Samsung Galaxy Note 8 at a bargain, instead of using the even pricing method. The cost to make the smartphone itself is around $275. There will be a picture below that will explain the details of the build of the smart phone. For the breakeven I subtracted the Total Cost from the Total Revenue. The profit for year 1 will be $1 billion dollars, I subtracted the total revenue for year 1, which was $1.06 billion and subtracted that number by the fixed cost amount of $60
A marketer doesn’t just have a plan. Marketers now open up to a wider strategic plan and it’s based on steps that balance out what the market is offering consumers. These marketers must analyze their production with these steps, then make a portfolio of the growth and even their down falls therefore this keeps these marketers to continuously innovate and create even a greater amount of value for their customers. Marketing management functions are discussed along with the marketing mix and strategy.
The major objective of any company is to make profits. Marketing is responsible for identifying a company’s customers anticipating their needs and wants, satisfying theses needs while keeping the its major goal which maximizing profits
Accrual accounting is an accounting method that recognizes economic events regardless of when cash transactions occur in order to measure the performance and position of a company. The general idea is that economic events are matching revenues to expenses to recognize which is the matching principle at the time in which the transaction occurs rather than when payment is made (or received). This method allows combining the current cash inflows or outflows with future expected cash inflows or outflows to give a more accurate picture of a company's current financial condition. Accrual accounting is considered to be the standard accounting practice for most companies with the exception of very small operations. This method provides a more
In order to know is the market plan is it successful; we can look at the profit. If the profit is rising then it is a well strategy. First we have to set the budget for the business then have to choose your marketing strategies to communicate with the customers.