Marketing Opportunity Bsbmkg 501 PDF

Preview

Summary

assignment...

Description

Marketing Opportunity 1. Manufacture own brand

It’ s not feasible manufacture would take place at a leased plant in India as BBQfun has no manufacturing capability. Also, manufacture in Australia would be too expensive.

2. Sell through ecommerce (online) 3. Sell at bargain prices

To offer all products in an online store. Stock could be stored at no extra cost at existing stores. Customers would cover delivery costs. To aim to increase market share by cutting the cost of products and aiming at mass appeal

BBQfun’s marketing research found the following market needs and trends:

Market needs      

Selection – a wide choice of options. Accessibility – the customer needs easy access to the store with minimal inconvenience. Online shopping is becoming increasingly popular. Customer service – the customer needs expert customer service to help sort through choices. Competitive pricing – the customer needs all products/services to be competitively priced relative to comparable high-end outdoor lifestyle options offered by competitors. Flexible payment – the customer needs easily managed payment plan. Quality guarantees – the customer requires three year product guarantees

Market trends The market trend for outdoor lifestyle stores is headed toward a more sophisticated and informed customer. Outdoor lifestyles customers are becoming more sophisticated in a number of different ways:   

Item quality – the preference for high quality items is increasing as customers are learning to appreciate the quality differences. Unique – our patrons appreciate the opportunity to include outdoor lifestyles in their home that stand out from the mass-produced and low-quality items. Selection – people are demanding a larger selection of choices; they are no longer accepting a limited offer in outdoor lifestyles.

Page 1 of 7

Marketing Opportunity Impact 1. Manufacture own brand

Product quality might not be good as it has no manufacturing capability which might affect customers satisfaction

2. Sell through e-commerce (online)

Easiest way to sell and reach to customers. Broader customer reach which might increase customer base which might allow BBQfun to enter new markets. But keep in mind that customer might prefer to buy it directly in the store which they can see and feel the actual product rather than buying it online. Might lose quite amount of profit by selling it at bargain prices.

3. Sell at bargain prices

Marketing Risk 1. Manufacture own brand

Might lose some customers because of uncertainty of the product quality Manufacturing in Australia can lead to over budget

2. Sell through ecommerce (online) 3. Sell at bargain prices

Compliance regarding import or export law as doing delivery to foreign country for the online order. Taxes Cutting the cost of the product might affect the quality of the product Low profit

Future Financial Estimates 1. Manufacture own-branded products. BBQs

Outdoor Furniture

BBQ Accessories

7,200

3,120

21,000

Average selling price $600

$850

$50

3,120 x $850 =

21,000 x $50 =

$2,652,000

$1,050,000

Predicted sales volume (units)

Total revenue sales volume x average selling price

7200 x $600 = $4,320,000

Total revenue: $4,320,000 + $2,652,000 + $1,050,000 =

Page 2 of 7

$8,022,000 Cost per unit $100

Unit contribution margin average selling price – cost per unit Total gross profit sales volume x unit contribution margin

$250

$10

$600 - $100 =

$850 - $250 =

$50 - $10 =

$500

$600

$40

7200 x $500 =

3,120 x $600 =

21,000 x $40 =

$1,872,000 $4,884,714

$856,000

$3,600,000

Current fixed costs: Additional lease costs:

$500,000

Additional labour costs:

$250,000

Total fixed costs: current fixed costs + additional fixed costs Total net profit: total gross profit – total fixed costs

Total gross profit: $3,600,000 + $1,872,000 + $856,000

$6,328,000 $4,884,714 + $500,000 + $250,000 = $5,634,714 $6,328,000 - $5,634,714 = $693,286



Calculate the probable return on investment for this marketing opportunity. The formula you should use is ( New gross profit projection−Original gross profit projection ) Projected return on investment= x 100 Investment

Projected return on investment Return on Investment = [($6,328,000 - $6,677,000) / $750,000] x 100 = -46.53%

2. Sell products through e-commerce (online) Australia-wide.

Predicted sales volume (units)

BBQs

Outdoor Furniture

BBQ Accessories

17,000

7,000

30,000

Page 3 of 7

Average selling price

$640

$880

$55

10,880,000

6,160,000

1,650,000

$340

$460

$30

300

420

25

5,100,000

2,940,000

750,000

Total revenue sales volume x average selling price Cost per unit

Unit contribution margin average selling price – cost per unit Total gross profit sales volume x unit contribution margin

Current fixed costs:

$4,884,714

Additional training costs:

$100,000

Additional website costs:

$300,000

Additional reconfiguring or warehouse costs: Additional labour costs:

$300,000

Total revenue: 18,690,000

Total gross profit: 8,790,000

$300,000

5,884,714 Total fixed costs: current fixed costs + additional fixed costs Total net profit: 2,905,286 total gross profit – total fixed costs Calculate the probable return on investment for this marketing opportunity. The formula you should use is ( New gross profit projection−Original gross profit projection ) x 100 Projected return on investment= Investment Projected return on investment Return on Investment=[(8,790,000 - 6,677,000)/1,000,000] x 100= 211.3%

3. Sell products at bargain prices.

Predicted sales volume (units)

BBQs

Outdoor Furniture

BBQ Accessories

10,000

6,000

35,000

Page 4 of 7

Average selling price $400

$500

$30

3,000,000

1,050,0000

$250

$10

200

250

20

2,000,000

1,500,000

700,000

Total revenue 4,000,000 sales volume x average selling price Cost per unit $200

Unit contribution margin average selling price – cost per unit Total gross profit sales volume x unit contribution margin

Total revenue: 7,050,000

Total gross profit: 4,200,000

Current fixed costs: $4,884,714 Additional restructuring costs: $50,000 Additional re-training costs: $50,000 Total fixed costs: current fixed costs + additional fixed costs Total net profit: total gross profit – total fixed costs

4,984,714

-784,744

Calculate the probable return on investment for this marketing opportunity. The formula you should use is: ( New gross profit projection−Original gross profit projection ) Projected return on investment= x 100 Investment Projected return on investment ROI= [(4,200,000-6,677,000)/100,000]x100=2,477%

Marketing Opportunity Rank Rank Marketing Opportunity 1. Online store

Reason for ranking Highest ROI and lowest risk

Page 5 of 7

2. Manufacture own brand

Second highest ROI Medium risk

3. Sell at bargain prices

Lowest ROI, in fact unable to get return on investment at all

Changes to current operations Marketing Opportunity: Online Stores Required changes to current operations (at least 2) 1.

Building websites

2.

Hiring new staff

(Estimated) Resource requirements Category

Estimated cost

Staff

50,000 for Hiring new staff

Training

20,000 for training

Information Technology

100,000 for developing websites

Marketing

500,0000

Page 6 of 7

Marketing Opportunity Viability Based on the data above, online stores opportunity is the most viable opportunity out of 3 options provided for BBQfun. It has the highest ROI, lowest risk of all and low cost to implement. Online stores option will not have a big impact for the BBQfun financial capability as it has low cost to be implemented, in fact it is the most profitable options of all. Keep in mind that proper training needs to be done for all existing employee and new employees regarding the online stores and websites to ensure that the quality of service to existing and new customers remains consistent. Furthermore new employees which have experience in online stores and operating websites need to be hired to improve the quality of services. At last, there are some legal issues that needs to be kept in mind regarding online stores such as privacy laws , protection of Intellectual Property, Trademarks and Copyright, AntiDiscrimination Act for the recruiting process

Page 7 of 7...