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away from BMW just because of cost. They have proven they are the best game in town by continuing to deliver results for us in the marketing department. We would like to continue to give that opportunity to prove that with our new strategy. We understand the pricing and the risk as we are looking at different advertising avenues that they have not used with us in the past. However, as mentioned, they have proven their ability to keep us a household name; we will continue to let them do that, as long as the relationship proves profitable. As part of our strategy, we are implementing the sales and service dynamic. This will allow 2 to 3 sales managers to work with one indirect sales person (customer service). We have cut our sales force down to 125 (from 127). Our sales managers cut from 94 to 90 and increased our indirect sales folks from 33 to 35. This will give us the right mix so we are not only selling but also servicing our customers. No matter the size of the company, they are our priority.11
Financial ProjectionsBased off the income statement from the manual, “Allround is a successful and profitablebrand with sales of $355.3 million at the manufacturer’s level last period. The gross margin was $172.3 million, with the margin after advertising and promotional expenses of $145.3 million. After all marketing expenditures, including administrative costs and sales force, the margin was $129.5 million” (Thomas C. Kinnear, 2019). Kinnear also shared, “The Allround brand also has a fixed cost, which includes the facility the Allround product is manufactured, and share of corporate overhead charges. In order for AllStar to meet the demand, it needs to expand its production plant to increase the fixed cost based on production capacity increase. The fixed cost charges are currently $62.4 million, with a net income of $67.2 million” (Thomas C. Kinnear, 2019). Of course, the expectation based off this financial information is for an increase in income in the future. The Allround Brand management team has been tasked to “maintain long-term profitability and market share in this increasingly competitive and changing environment” (Thomas C. Kinnear, 2019). As you can see from the charts below, they are currently leading andshow a strong plan for keeping that moving forward. 12
Market Share by Product CategoryColdCoughAllergyNasalTotalMfr. Sales (M$)$879.7$366.4$126.1$119.1$1,491.2Growth6.6%3.2%5.9%4.5%5.6%Allround40.4%0.0%0.0%0.0%23.8%Believe0.0%0.0%50.7%0.0%4.3%Besthelp25.2%0.0%0.0%0.0%14.9%Coughcure0.0%54.3%0.0%0.0%13.3%Defogg0.0%0.0%49.3%0.0%4.2%Dripstop0.0%0.0%0.0%52.0%4.2%Dryup14.9%0.0%0.0%0.0%8.8%Effective0.0%0.0%0.0%48.0%3.8%End0.0%45.7%0.0%0.0%11.2%Extra19.5%0.0%0.0%0.0%11.5%Manufacturer Sales - Year 2Market Share Based on Manufacturer SalesColdCoughAllergyNasal SprayMfr. Sales$1,143.1 $405.5 $169.0 $182.9 Growth3.9%-3.4%5.7%9.6%Allround37.1%Believe57.1%Besthelp27.0%Coldcure11.1%Coughcure47.9%Defogg42.9%Dripstop43.3%Dryup11.3%Effective56.7%End52.1%Extra13.5%Note: dollar amounts shown are in millions.