Describe the size of the overall gross margins ie

Info icon This preview shows pages 14–16. Sign up to view the full content.

Describe the size of the overall gross margins (i.e., selling price less cost of goods sold or variable costs) and margins the for each of the major revenue drivers in the business. Where you have multiple products in a given revenue driver category, calculate the contribution margin for each product and take an average (or just use the margin for the most typical product that falls within that revenue driver). Then determine the weighted average contribution margins by weighting the individual contribution margins of each revenue driver based on the percentage of total sales expected to come from that revenue driver. Include results of your overall contribution analysis. B. Fixed and Variable Costs: Provide a detailed summary of fixed and variable costs, in dollars and as a percentage of total costs, for the venture. To get variable costs, you must identify a “unit of analysis” . Fixed costs assume a given range of volume or capacity. For analysis purposes, classify semi-variable costs as either fixed or variable. Where appropriate, show relevant industry benchmarks for costs. C. Operating Leverage and its Implications Characterize whether your cost structure is predominantly fixed or variable and then indicate the implications. For example, if you have a high fixed cost structure, you have high operating leverage which means it takes longer to reach breakeven, but once there, much more of your revenue flows straight to the bottom line. High operating leverage (high fixed costs) suggests a riskier venture, at least initially. D. Start Up Costs Distinguish the one-time start-up costs of the business (put into a table). These are distinct from the ongoing operating costs. E. Overall Economic Model Put the pieces above together. Indicate how you will make money in terms of the combination of margins, volumes, operating leverage and revenue source flexibility. How attractive is this combination? F. Breakeven Chart and Calculation Make clear what your unit of analysis is for the purpose of calculating breakeven. Calculate breakeven and prepare a chart that shows when breakeven will be reached and any stepwise changes in breakeven that may occur (as fixed costs go up). Discuss whether it will be easy or difficult to achieve the breakeven level of sales, the size of gross margins and price sensitivity, and how the break-even point might be lowered in case the venture falls short of sales projections. G. Profit Durability: Address the issue of how solid or vulnerable the profit stream appears to be. Provide reasons why your profit stream is solid or vulnerable, such as barriers to entry you can create, your technological and market lead time, and so on.
Image of page 14

Info icon This preview has intentionally blurred sections. Sign up to view the full version.

IMAGINE > BELIEVE > CREATE 14 SECTION V: THE MARKETING PLAN The Marketing Plan describes how your projected sales will actually be attained. How will you make sales actually happen? A great idea is meaningless if you cannot find customers. Thus, this section builds on the earlier Market Section , where you defined your market and outlined market segments and their buyer behavior. The marketing plan
Image of page 15
Image of page 16
This is the end of the preview. Sign up to access the rest of the document.
  • Spring '17
  • Yongseok Jang
  • Marketing, The Market

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern