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First Operating Statement Corporate Home and Domestic Markets Ted Mitchell.

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Presentation on theme: "First Operating Statement Corporate Home and Domestic Markets Ted Mitchell."— Presentation transcript:

1 First Operating Statement Corporate Home and Domestic Markets Ted Mitchell

2 The Heart of Analysis Operating Statements (aka Income Statement) Corporate Level Statement Home Market Statement Domestic Market Statement Foreign Market Statement

3 Corporate level Inputs and Outputs Quantity sold145,551 Variable Cost (33.94) Bidding Pricenone Qty available for Bidding none Current Product QualityVersion #0 Product Development$900,000 Total Industry Expenditures on Development $7,200,000

4 Corporate Operating Statement Total Quantity Sold In All Markets, Q 145,551 Revenue, R$14,658,210 Total Cost of Goods Sold ($33.94 x Q) 4,940,000 Gross Profit, G9,718,210 Total Promotion Expense, ME10,820,000 Profit after Promotion, M(1,101,790) Total Product Development, R&D900,000 Net Profit, Z($2,001,790)

5 Corporate Operating Statement Total Quantity sold, Q145,551 Revenue$14,658,210 Total Cost of Goods Sold (33.94 x Q) 4,940,000 Gross Profit Margin9,718,210 Total Promotion Expense10,820,000 Profit after Promotion (NMC)(1,101,790) Research & Development900,000 Net Profit($2,001,790) You are in the RED! Home Domestic or Both?

6 First Home Operating Statement Quantity sold, Q77,931 Revenue ($110 x Q)$8,572,410 Total Variable Cost ($33.94 x Q) 2,644,978 Gross Profit Margin ($76.06 x Q)5,927,432 Total Promotion Expense5,760,000 Profit after Promotion (NMC)167,432 Market Research0 Net Profit (without share of Product Development) 167,432

7 First Domestic Operating Statement Quantity sold, Q67,620 Revenue (90 x Q)$6,085,800 Total Variable Cost (33.94 x Q) 2,295,023 Gross Profit Margin (56.06 x Q)$3,790,777 Total Promotion Expense5,060,000 Profit after Promotion (NMC)(1,269,223) Market Research0 Net Profit (without share of Product Development) (1,269,223)

8 Comparison of Two Performances HomeDomestic Quantity sold, Q 77,93167,620 Revenue $8,572,410$6,085,800 Total Variable Cost (33.94 x Q) 2,644,9782,295,023 Gross Profit Margin 5,927,4323,790,777 Total Promotion Expense 5,760,0005,060,000 Profit after Promotion (NMC) 167,432(1,269,223) Market Research 00 Net Profit (without share of Product Development) 167,432(1,269,223)

9 Inputs and Outputs Domestic Market Selling Price90 Advertising2,000,000 Consumer Promotion1,500,000 Sales Force 7 x 80,000560,000 Dealer Promotion1,000,000 Total Promotion Expense5,060,000 Market Research0 Quantity sold67,620 Variable Cost per Unit (33.94) 33.94

10 Inputs and Outputs Home Market Selling Price per Unit110 Advertising1,500,000 Consumer Promotion2,500,000 Sales Force 7 x 80,000560,000 Dealer Promotion1,200,000 Total Promotion Expense5,760,000 Market Research0 Quantity sold77,931 Variable Cost per Unit (33.94) 33.94

11 Inputs and Outputs Both Markets HomeDomestic Selling Price per Unit Advertising 1,500,0002,000,000 Consumer Promotion 2,500,0001,500,000 Sales Force 7 x 80, ,000 Dealer Promotion 1,200,0001,000,000 Total Promotion Expense 5,760,0005,060,000 Market Research 00 Quantity sold 77,93167,620 Variable Cost per Unit (33.94) 33.94

12 Inputs and Outputs Both Market HomeDomestic Selling Price per Unit Advertising 1,500,0002,000,000 Consumer Promotion 2,500,0001,500,000 Sales Force 7 x 80, ,000 Dealer Promotion 1,200,0001,000,000 Total Promotion Expense 5,760,0005,060,000 Market Research 00 Quantity sold 77,93167,620 Variable Cost per Unit (33.94) When you have lower Price Will you sell more stuff?

13 Inputs and Outputs Both Market HomeDomestic Selling Price per Unit Advertising 1,500,0002,000,000 Consumer Promotion 2,500,0001,500,000 Sales Force 7 x 80, ,000 Dealer Promotion 1,200,0001,000,000 Total Promotion Expense 5,760,0005,060,000 Market Research 00 Quantity sold 77,93167,620 Variable Cost per Unit (33.94) When you have More Advertising Will you sell more stuff?

14 Inputs and Outputs Both Market HomeDomestic Selling Price per Unit Advertising 1,500,0002,000,000 Consumer Promotion 2,500,0001,500,000 Sales Force 7 x 80, ,000 Dealer Promotion 1,200,0001,000,000 Total Promotion Expense 5,760,0005,060,000 Market Research 00 Quantity sold 77,93167,620 Variable Cost per Unit (33.94) There are upper amd lower limits to your levels of marketing effort. What does Market research say about the upper limit for consumer promotion?

15 Inputs and Outputs Both Market HomeDomestic Selling Price per Unit Advertising 1,500,0002,000,000 Consumer Promotion 2,500,0001,500,000 Sales Force 7 x 80, ,000 Dealer Promotion 1,200,0001,000,000 Total Promotion Expense 5,760,0005,060,000 Market Research 00 Quantity sold 77,93167,620 Variable Cost per Unit (33.94) What does Market Research say about the upper limit for dealer promotion?

16 Inputs and Outputs Both Market HomeDomestic Selling Price per Unit Advertising 1,500,0002,000,000 Consumer Promotion 2,500,0001,500,000 Sales Force 7 x 80, ,000 Dealer Promotion 1,200,0001,000,000 Total Promotion Expense 5,760,0005,060,000 Market Research 00 Quantity sold 77,93167,620 Variable Cost per Unit (33.94) When the Markets are different, Then they will have different levels Of sensitivity to effort!!

17 Customer Sensitivity to Marketing Mix HomeDomestic Changes in Selling Price LittleVery Advertising VeryLittle Consumer Promotion ModerateVery Sales Force 80,000 LittleModerate Dealer Promotion Little Target Total Promotion Expense 2,650,0002,900,000

18 Price Sensitivity Quantity Selling Price Domestic Market A change in price results in a change in quantity sold

19 Price Sensitivity Quantity Selling Price Domestic Market Home Market

20 Price Sensitivity Quantity Selling Price Domestic Market Home Market

21 Customer Sensitivity to Marketing Mix HomeDomestic Changes in Selling Price LittleVery Advertising ?????? VeryLittle Consumer Promotion ModerateVery Sales Force 80,000 LittleModerate Dealer Promotion Little Target Total Promotion Expense 2,650,0002,900,000

22 Customer Sensitivity to Marketing Mix HomeDomestic Changes in Selling Price LittleVery Advertising VeryLittle Consumer Promotion ModerateVery Sales Force 80,000 LittleModerate Dealer Promotion Little Target Total Promotion Expense 2,650,0002,900,000

23 Advertising Sensitivity Quantity Advertising Domestic Market A change in price results in a change in quantity sold

24 Advertising Sensitivity Quantity Advertising Effort Domestic Market Home Market

25 Customer Sensitivity to Marketing Mix HomeDomestic Changes in Selling Price LittleVery Advertising VeryLittle Consumer Promotion ????? ModerateVery Sales Force 80,000 LittleModerate Dealer Promotion Little Target Total Promotion Expense 2,650,0002,900,000

26 Customer Sensitivity to Marketing Mix HomeDomestic Changes in Selling Price LittleVery Advertising VeryLittle Consumer Promotion ModerateVery Sales Force 80,000 LittleModerate Dealer Promotion Little Target Total Promotion Expense 2,650,0002,900,000

27 Customer Sensitivity to Marketing Mix HomeDomestic Changes in Selling Price LittleVery Advertising VeryLittle Consumer Promotion ModerateVery Sales Force 80,000 ??????? LittleModerate Dealer Promotion Little Target Total Promotion Expense 2,650,0002,900,000

28 Customer Sensitivity to Marketing Mix HomeDomestic Changes in Selling Price LittleVery Advertising VeryLittle Consumer Promotion ModerateVery Sales Force 80,000 ??????? LittleModerate Dealer Promotion Little Target Total Promotion Expense 2,650,0002,900,000

29 Customer Sensitivity to Marketing Mix HomeDomestic Changes in Selling Price LittleVery Advertising VeryLittle Consumer Promotion ModerateVery Sales Force 80,000 LittleModerate Dealer Promotion ????? Little Target Total Promotion Expense 2,650,0002,900,000

30 Customer Sensitivity to Marketing Mix HomeDomestic Changes in Selling Price LittleVery Advertising VeryLittle Consumer Promotion ModerateVery Sales Force 80,000 LittleModerate Dealer Promotion ????? Very LittleLittle Target Total Promotion Expense 2,650,0002,900,000

31 Customer Sensitivity to Marketing Mix HomeDomestic Changes in Selling Price LittleVery Advertising VeryLittle Consumer Promotion ModerateVery Sales Force 80,000 LittleModerate Dealer Promotion Very LittleLittle Target Total Promotion Expense 2,650,0002,900,000

32 Questions Know upper and lower limits of marketing effort. Know customer sensitivity to Changes in marketing effort


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