Market Strategy the financial implications of marketing.

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Presentation transcript:

Market Strategy the financial implications of marketing

Market Strategy Your task is to prepare a five year plan: You must explore several strategies Set and quantify objectives You must balance profitability with growth and survival You will be helped by a computer Leaving you to think and discuss

The Business Situation A typical manufacturing company The current, domestic market has stagnated So you must investigate new markets –Exporting the current products Selling directly using your own staff Selling via non-exclusive agents Selling via non-exclusive dealers –Launch New Domestic Products

Performance Measures Profitability –Return on Investment Growth –Sales (units & value) –Market Share (unit & cash) –Worth (residual profit) Survival –Cumulative Cash Flow Long Term –Discounted Cash Flow (I.R.R. & N.P.V.)

Market Structure Total Market –Total potential sales –Growing over time Served (penetrated) Market –Where the company is selling –Penetration of total market increases Competitive Share –Proportion of served market that buys –Influenced by your marketing decisions

Market Influences Price Promotion Performance Inventory Availability Receivables Policy Launch Year

Using the Computer Choose & enter a team name The Planning Options –Review Current Plan –Compare Plans –What-If Analysis –Change Working Plan –Recess Planning

Review Current Plan Select from several reports –Detail Results –Summary Results –Combined Detail –Combined Summary

Detail Results Shows for each of the five years –Sales Revenue –Unit Market Share –Cash Market Share –Profit –Profit to Sales –Capital Employed –Cumulative Cash Flow –Return on Investment –Residual Profit

Summary Results Shows for the five years as a whole –Served Market Share –Total Sales Revenue –Average Unit Market Share –Average Cash Market Share –Total Profit –Average Profit to Sales –Worst Cash Flow –Internal Rate of Return –Net Present Value

Observations Think before you act (do not waste your plans) Ask for help if you need it There is no right or wrong answer (your best plan will be the one that best meets the financial objectives you decide) Enjoy the challenge