Describe the key operations controls associated withthe marketing plan developed during your simulation experience.Consider cost analysis, product-service mix control, sales control,and marketing channel control. Choose one of these considerationsthat you think carried the most weight as a key operations controlof your marketing plan and explain why.
Describe the key operations controls associated withthe marketing plan developed during your simulation experience.Consider cost analysis, product-service mix control, sales control,and marketing channel control. Choose one of these considerationsthat you think carried the most weight as a key operations controlof your marketing plan and explain why.
Related questions
You are the manager of the marketing department of a companythat imports products and wholesales them to retailers. You have astaff of six professionals and are responsible for an annual budgetof approximately $2M dollars. You report to the Senior VP of Salesand Marketing. Because of your prior background in Finance the CEOof the company has asked for your help in providing an analysis forthe past two years of budgeted dollars to actual results. Your bossis concerned about your past and the current year results and hasrequested that you provide to her an analysis of the prior twoyears and a projection of where you will land at the end of thecurrent year. She also wants to see a preliminary budget for yourdepartment for next year. Company Income Statements are providedfor the prior two years that show the budgeted dollars and actualresults for your company by department, and the current year budgetwith the first six months of actual operational results areavailable. A breakdown of your departmental budget is provided forthe prior two years that show the budgeted dollars and actualresults by budget code. The current year budget with the first sixmonths of actual results is also available.
Analysis Questions to answer for the CEO for Year Two.
In year two, one of the companyâs largest suppliers had qualityissues with their product and one of their bigger clients wentbankrupt, causing sales revenue to drop significantly. List threeareas that did a good job of controlling cost to off-set therevenue decrease and some plausible reasons as to how or why theseareas were successful.
Why would it seem like the I/T department did not decrease theirspend in line with the other departments?
Was year one or year two a better over-all year for the companyand explain your answer?
Income Statement | YEAR ONE | ||
Budgeted | Actual | VARIANCE + underbudget (-) over budget | |
Sales Revenue | $ 21,000,000 | $ 22,500,000 | $ (1,500,000) |
Cost of Goods Sold | 12,600,000 | 13,950,000 | (1,350,000) |
Gross Profit | 8,400,000 | 8,550,000 | (150,000) |
SG&A Expense by Department (incldingsalaries) | |||
Sales | 2,310,000 | 2,410,000 | (100,000) |
Marketing | 1,933,940 | 2,123,885 | (189,945) |
I/T | 315,000 | 318,000 | (3,000) |
Warehouse & Shipping | 1,050,000 | 1,275,000 | (225,000) |
Corporate Executives | 950,000 | 1,250,000 | (300,000) |
TOTAL SG&A Expense | 6,558,940 | 7,376,885 | (817,945) |
Net Operating Profit | 1,841,060 | 1,173,115 | 667,945 |
Profit Margin | 9% | 5% | |
Income Statement | YEAR TWO | ||
Budgeted | Actual | VARIANCE + underbudget (-) over budget | |
Sales Revenue | $ 23,250,000 | $ 20,450,000 | 2,800,000 |
Cost of Goods Sold | 14,298,750 | 12,679,000 | 1,619,750 |
Gross Profit | 8,951,250 | 7,771,000 | 1,180,250 |
SG&A Expense by Department (incldingsalaries) | |||
Sales | 2,441,250 | 2,351,750 | 89,500 |
Marketing | 1,963,159 | 1,883,619 | 79,540 |
I/T | 327,600 | 325,000 | 2,600 |
Warehouse & Shipping | 1,278,750 | 1,022,500 | 256,250 |
Corporate Executives | 997,500 | 975,500 | 22,000 |
TOTAL SG&A Expense | 7,008,259 | 6,558,369 | 449,890 |
Net Operating Profit | 1,942,991 | 1,212,631 | 730,360 |
Profit Margin | 8% | 16% | |
Income Statement | CURRENT YEAR JAN - JUN | ||
Full Year Budget | Jan - Jun Actual Results | ||
Sales Revenue | $ 23,000,000 | $ 12,250,000 | |
Cost of Goods Sold | 14,490,000 | 7,533,750 | |
Gross Profit | 8,510,000 | 4,716,250 | |
SG&A Expense by Department (incldingsalaries) | |||
Sales | 2,300,000 | 1,286,250 | |
Marketing | 2,322,390 | 1,329,236 | |
I/T | 330,000 | 168,300 | |
Warehouse & Shipping | 1,150,000 | 551,250 | |
Corporate Executives | 1,027,425 | 436,656 | |
TOTAL SG&A Expense | 7,129,815 | 3,771,692 | |
Net Operating Profit | 1,380,185 | 944,558 | |
Profit Margin | 6% | 8% | |
ACTUAL RESULTS | Current Year Budget | Current Year Actuals | |||||||
SALARIES | YEAR ONE | VARIANCE + underbudget (-) over budget | YEAR TWO | VARIANCE + underbudget (-) over budget | Jan - Dec 20xx | January - June | |||
Marketing Manager (You) | 120,000 | 123,500 | 125,000 | 57,250 | |||||
Sr. Market Analyst | 95,000 | 98,000 | 102,000 | 46,000 | |||||
Sr. Market Analyst | 80,000 | 85,000 | 87,000 | 43,000 | |||||
Advertising Buyer | 68,000 | 72,000 | 74,500 | 35,000 | |||||
Creative Writer (1) | 56,000 | 63,000 | 65,500 | 33,200 | |||||
Graphic Designer (2) | 23,500 | 56,000 | 57,500 | 21,200 | |||||
Administrative Assistant (3) | 45,000 | 48,000 | 49,250 | 26,500 | |||||
TOTAL SALARIES | 487,500 | 54,500 | 545,500 | (15,470) | 560,750 | 262,150 | |||
Salary Burden | 131,625 | 14,715 | 147,285 | (4,177) | 154,206 | 72,091 | |||
Head Count Overhead | 67,500 | 8,100 | 79,800 | - | 81,900 | 39,000 | |||
Salary Burden is calculated at 27% of salaries in year 1 andyear 2 - increases to 27.5% in current operating year and will be28% the budget year | |||||||||
Salary Burden includes all local, state and federal taxes;company portion of medical and life insurance; and company match of401K plan | |||||||||
Head Count Overhead is the allocation of the company's fixedcost to each department on a monthly basis. | |||||||||
it is calculated by the number of employees you have each monthx $900 in year 1, $950 in year 2 and $975 in current operatingyear. | |||||||||
The allocation will be held at $975 for the budget year | |||||||||
Bonuses earned are included in the actual and budgetedsalaries. | Bonus % Paid Out | % Budgeted | % to Budget | ||||||
Bonuses earned are in the same year they are awarded, paid outon the last check of the current operating year | Year 1 | Year 2 | Current Year | Budget Year | |||||
You can earn up to 15% of your base salary each year | 15.0% | 11.0% | 12.5% | 12.5% | |||||
The Sr. Market Analyst can earn from 5% to 8% of their basesalary | 8.0% | 6.0% | 7.5% | 7.5% | |||||
The Ad buyer, creative writer and graphic designer can earn 3%to 5% of their base salary | 5.0% | 3.5% | 4.5% | 4.5% | |||||
The administrative assistant is on a quarterly bonuses plan andearns 1.5% to 3% of their quarterly salary | 3.0% | 3.0% | 3.0% | 3.0% | |||||
ALL BONUSUS ARE PRO-RATED BASED ON THE NUMBER OF MONTHSEMPLOYEED FOR THE YEAR | |||||||||
(1) Creative Writer was hired in September of year one | |||||||||
(2) Graphic Designer was hired in July of year one and quit inApril of current operating year | |||||||||
(3) Your admin. assistant informed you that she will be retiringat the end of the year after 25 years of service to the company | |||||||||
ACTUAL RESULTS | Current Year Budget | Current Year Actuals | ||||
YEAR ONE | VARIANCE + underbudget (-) over budget | YEAR TWO | VARIANCE + underbudget (-) over budget | Jan - Dec 20xx | January - June | |
Radio Ad Buys | 731,250 | (101,250) | 664,625 | 32,875 | 805,000 | 490,000 |
Newspaper Ad Buys | 450,000 | (135,000) | 306,750 | 42,000 | 460,000 | 306,250 |
Mailers and Flyers | 82,500 | (2,500) | 76,000 | 9,000 | 83,000 | 48,500 |
Conference Pamphlets | 72,000 | (4,000) | 64,750 | 9,750 | 76,400 | 65,000 |
Postage | 43,260 | (6,260) | 38,706 | 1,169 | 44,632 | 30,645 |
Travel | 23,500 | (3,500) | 19,500 | 4,750 | 32,000 | 12,000 |
Professional License | 5,000 | - | 5,500 | (500) | 5,500 | 2,500 |
Office Supplies | 8,500 | 1,500 | 7,300 | 2,700 | 11,500 | 1,100 |
Software & License | 21,250 | (16,250) | 7,500 | (2,500) | 7,500 | - |
ACTUAL SG&A EXPENSE | 1,437,260 | (267,260) | 1,190,631 | 99,244 | 1,525,532 | 955,995 |
