S5Product-LineAnalysis

S5Product-LineAnalysis - Statement of Product Manager...

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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 Product-Line Analysis In today's highly competitive global markets, new product models are replacing old product models ever faster. When new models are added to a product-line, intended and designed to serve the needs of a segment of customers better, they often take business away from existing models. This is called sales cannibalization or cannibalization, for short. Consider the following example: Video Concepts INC. (VCI) manufactures a line of DVD players that are distributed to retailers. The existing product-line consists of two models: Price Variable cost/unit Unit sales Model DX1 $100 $50 200,000 Model DX2 $150 $100 100,000 VCI is thinking of launching a new model DX3 with premium features that would be sold to retailers at a price of $300 and would involve variable costs/unit of $200, additional fixed cost spending of $200,000 in manufacturing and a marketing program cost of $1,000,000. The sales of the new model are estimated to be 20,000, including 10,000 sales that would have been made of the DX2 model. Thus, 10,000 of the 20,000 sales are cannibalization....
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This note was uploaded on 04/11/2011 for the course MRKT 3023 taught by Professor Biritella during the Spring '11 term at FIU.

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S5Product-LineAnalysis - Statement of Product Manager...

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