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Memo 4 Successes & Failures (MKTG 475)

Memo 4 Successes & Failures (MKTG 475) - TO CC FROM...

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TO: Russ Merz, Firm A CEO CC: FROM: RE: DATE: November 25, 2011 Outcomes for the Followers Market Segment for P5 – P8 Planned "Followers" P5 P6 P7 P8 Summary Market Demand (MDp) 281,000 360,000 504,000 657,000 1,802,000 Firm Share (MSp) 76.7% 66.7% 55.7% 46.7% 61.45% Unit Sales (Volume) (Vp) 184,000 90,000 134,000 195,000 603,000 Price (Pp) $375 $375 $375 $375 $375 Cost (Cp) $313 $313 $313 $313 $313 Margin (Mp) $62 $62 $62 $62 $62 Marketing Expenses (MEp) $905,000 $1,205,000 $1,605,000 $2,105,000 $1,455,000 Advertising Expenses $5,000 $5,000 $5,000 $5,000 $5,000 Followers Sales Force Expenses $900,000 $1,200,000 $1,600,000 $2,100,000 $1,450,000 Net Marketing Contribution (NMCp) $1,405,000 $1,705,000 $2,105,000 $2,605,000 $1,955,000 Firm A’s initial marketing plan actions for Period Five to Period Eight was to focus on investing money into the Followers market segment in order to grow our Vodite brand – VAAV – within that specific target market. The marketing action plans Firm A was going to implement to defend our position in the Vodite market was to increase VAAV’s advertising, sales force, and production in accordance to the growing Followers market segment. Production Looking at the above table, to find the overall Followers market segment demand for Vodite products, we multiplied the forecasted percent growth for the next period by the amount of units sold in the previous period. However, this total was quite a significant increase, so we assumed that the Followers market segment would sell approximately thirty to fifty thousand units less. The same production concept was used to estimate how many units Firm A was to produce and how many we would sell. Also, taken into consideration with the “units to produce” analysis was the fact that the production department would adjust the firm’s units produced by either plus or minus twenty percent. Firm A felt that this allowed for a larger “units to produce” cushion. Advertising The above table shows that Firm A was planning on investing a significant amount of money in their
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advertising for each period, $5,000,000. The thought process behind this concept was that the more we invest in advertising the more brand awareness would increase; therefore, hopefully increasing the Followers market segment’s purchase intentions. Sales Force As you can see, according to the above table, our sales force expense strategy was to continuously increase the amount at a steady incremental rate to invest in each of the four periods. Firm A implemented this strategy because the number of each distribution channel – specialty stores, department stores, and mass merchandise stores – was continually increasing. Therefore, in order for
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Memo 4 Successes & Failures (MKTG 475) - TO CC FROM...

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