S1VarianceAnalysis

S1VarianceAnalysis - Statement of Product Manager Income*...

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Unformatted text preview: Statement of Product Manager Income* Statement of CRM Segment Manager Income Gross sales Gross sales Less: Less directly measured customer specific costs** Returns Customer returns Allowances and adjustments Customer credit cost, allowances/adjustments Net sales- Customer discounts Cost of goods shipped Customer ordering/shipping/delivery costs Cost of goods returned Customer direct selling costs Net cost of goods at std. cost Customer direct marketing/promotion costs Other production costs Customer after-sales service costs Direct cost of goods sold to customer Gross margin- Gross Margin- Less: Less: Advertising and promotion Marketing, sales, service fixed costs Consumer media Advertising and promotion Trade and consumer promotion Consumer media Professional advert./promotion Trade marketing and promotion Web-site maintenance Delivery Other sales support program costs Discounts Functional administration and overhead Market research Advertising Marketing Product manager income- Sales Other marketing costs Service and customer support Field selling Performance system control measurement Shipping Market research Advertising administration Other marketing overhead costs Marketing administration Total marketing fixed costs- Sales administartion Sales/marketing systems Customer service Customer service systems Total other marketing costs- Nonmarketing expenses Nonmarketing expenses Research Research General administration General administration Other expense Other expense Other income Other income Total nonmarketing expense- Total nonmarketing expense- Operating contribution Operating contribution Capital charge Capital charge Profit contribution Profit contribution Variance Analysis Comparing actual performance to expected (planned/budgeted) performance* A first vital step in marketing planning and improving marketing processes is performance gap analysis, the difference between planned and actual performance. The fundamental steps in all planning processes, quality improvement processes and also in all cost control systems, are (1) variance analysis that identifies high variance results; (2) diagnosing the reason for them; and, (3) making improvements in processes and your marketing mix cost control. The spreadsheet on page 3 presents a variance analysis that compares actual to planned performance and the effect on the bottom line of miscalculations in planning, such as estimating market size and market share on the demand side, and selling prices and costs on the supply side. But first let us define some terms: Variances on the size of the market and market share are called Volume variances. For example, Expected Actual Variance Market Size 40,000,000 50,000,000 10,000,000 Market Share 50.0% 44.0%-6.00% Sales quantity in units 20,000,000 22,000,000 2,000,000 Variances between expected (sometimes called standard costs) and actual costs and prices are called Contribution Variances (or price-variable cost variances). For example: Expected Actual Variance...
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S1VarianceAnalysis - Statement of Product Manager Income*...

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