1. effect
WORKSHOP

2. PROFIT CONCEPT: GROSS MARGIN AND MARKUP
effect
WORKSHOP
Both concepts relate to the profit of a product or entire transaction (sale of many products) when the cost is subtracted from the price or revenue (=sales)
Note definitions:
- Sales = Revenue = Quantity (no.of pieces) x Price (per piece)
- Cost is either cost per piece or total cost: Quantity x Cost (per piece)
So Gross Margin and Markup – if expressed in Dirhams – are both a different way of saying profit: GM = Markup = Profit = Price (Sales) – Cost
However: People talk more often about Gross Margin and Markup in terms of percentages and here lies the difference: Gross Margin relates this profit to price or sales, and Markup relates this product to cost
- GM% = Price – Cost or Sales – Cost
Price Sales
- Markup = Price – Cost
Cost

3. GROSS MARGIN AND MARKUP EXAMPLES:
effect
WORKSHOP
Product 1: Price / case = 60
Cost / case = 45
Gross Margin per case = Markup per case = Profit per case = 60 – 45 = 15
Gross Margin % = Gross Margin as a % of price = 15 = 25% 60
Markup % = Markup as a % of cost = 15 = 33% 45
Assume another product 2 with price/case=80 and cost/case=50: sell 20 cases of product 1 and 10 cases of product 2. What is the GM% of this sale:
GM% = (20 x x 80) – (20 x x 50) = 30%
(20 x x 80)

4. TRADE OFFER Trade offer is 10+1 Price is dhs. 85/case
effect
WORKSHOP
Trade offer is 10+1
Price is dhs. 85/case
Cost is dhs. 65/case
GM without trade offer = (85-65) 85
GM with trade offer is 10x85-(10+1)x65
10x85
Effective price is 10x85 11

5. CREDIT TERMS
effect
WORKSHOP
Credit period: number of days after statement day that client has to pay
Statement day(s): typically once a month, at end of month
Credit Limit: maximum amount of dirhams outstanding
If purchases are dhs 3,000 per month and terms are 30days from statement:
- what is effective credit period for the client?
- what should be the minimum credit limit?

6. effect IN 30 SECONDS effect WORKSHOP
effect is a high quality energy drink from Germany
It is growing fast all around the world and is already no.2 in Germany and no.4 in Europe
effect has the well known and accepted energy drink taste but costs less than its main competitor
This means that if you switch to effect, you can make substantial savings in your purchases
effect comes in the typical 250ml can, but has a simple and puristic design
Provided effect is the exclusive energy drink in your establishment, we can give extensive marketing support based on the volume of your purchases
For this marketing support we have a variety of advertising and other branding material, and can also tailor make some if the volumes justify it

7. MARKETING TOOLS POS Cash Free Stock Sampling Volume incentives
effect
WORKSHOP
POS
Cash
Free Stock
Sampling
Volume incentives
Staff incentives
Event support
Menu printing
Cocktail menus

8. MARKETING TOOLS: POS MATERIAL
effect
WORKSHOP
big chiller- 25 cases
cube chiller- 50 cans
t-shirts
illuminated chalk board
Magnetic display
cooler box
table tents
posters
napkins

9. MARKETING TOOLS: FREE STOCK
effect
WORKSHOP
First fill of minibar
Upfront incentives
For staff party

10. MARKETING TOOLS: VOLUME INCENTIVES
effect
WORKSHOP
Objective is to stimulate volumes
Can be paid in cash or in stock
Should be defined in brackets of purchase
Note: always on purchase

11. MARKETING TOOLS: STAFF INCENTIVES
effect
WORKSHOP
To stimulate sales
Specially if not exclusive
Volume dependent (eg dhs/case)
Can be in cash or otherwise

12. MARKETING TOOLS: MENUS AND RECIPES
effect
WORKSHOP
Menu printing
- we can design the menu
- pay some or all of printing costs
- the more ESF brands the better!
Cocktail and Mocktail recipes
- this can increase energy drink consumption
- we have many recipes
- we can create recipes specially for the client
- can include Fabbri syrups and Ferrarelle
- staff training and menu design/printing

13. effect EXCLUSIVITY Exclusivity = only effect available Two reasons:
WORKSHOP
Exclusivity = only effect available
Two reasons:
- if not exclusive, only RB will sell and everybody will be disappointed with effect
- we want to support the client, but for this we need good sales and knowledge of volumes
Particularly necessary in on-trade: cafes, restaurants, bars, clubs, sports, gyms, games

14. ACTION WITH VERY SMALL CUSTOMERS
effect
WORKSHOP
Increase sales • more effect
- make exclusive!
- marketing activities
- cocktails / mocktails
- promotions
• sell other products
Reduce Service • drop
• reduce frequency
• pass to vansales if on route
• customer can pick up himself

15. FREQUENTLY ASKED QUESTIONS BY THE CUSTOMER
effect
WORKSHOP
Question
Answer
Where are you available?
Why are you not advertising
(like RB)?
Do we have sugar free?
What if the clients don’t come because there is no RB?
What if a client asks for RB?
• All important retail
• Increasingly in on-trade
We prefer passing the money to the customer
We will soon
Are they coming to your fantastic establishment just because of RB?
Serve effect and show him that it is just as good or better

16. dhs / case effect PROFITABILITY MODEL FOR SALES PEOPLE effect WORKSHOP
Sales Price = to be paid by customer
90*
Pocket
as incentive*
Spend on
Marketing*
• 50% paid for by ESF
• charged at cost
Cost Of
Goods
Sold
= to be paid to ESF 60
Product Cost 35
* up to Manager

17. effect PROPOSAL MODEL : CONCEPTS
WORKSHOP
Trade offer
Volume incentive
COG(S)
Amortisation
• To stimulate large size orders
• buy 10, get 1 free : 10+1
• To stimulate overall consumption
• Depends on targets
• Can be paid in money or goods
• Based on past consumption
• Cost of Goods Sold
• Value of the cases sold
• Period over which something is paid for
• Usually with large, upfront expenditures

18. effect (MARKETING) SUPPORT TOOLS
WORKSHOP
Price
• discount
Trade offer
Purchase size
• increase order size
• 10+1, 15+2, etc.
Start-up
• first filling / upfront
• staff party
• cash
cases
• in cases
Business
Volumes
Incentives
Marketing
Support
Tools
money
• in dhs / case
Bar staff
Equipment
• chillers
• magnetic / electronic
Shirts
POS
Bar materials
• coasters
• stirrers
• napkins
• etc.
Other – custom made
Other
• events
• effect night / sampling
• cocktail recipes
• competitions

19. ?? WHO DECIDES ?? effect PROPOSALS : DIFFERENT AUDIENCES
WORKSHOP
Purchasing Manager
Bar / Event Manager
Primary
Objective
• low cost of products
• successful product
• support for his activities
Marketing
Tools
• price
• trade offer
• business volume
incentives in cases
• start-up volume incentives
• start up cash
• business volume incentive in cash
• bar staff incentives and party
allowance
• POS
• promotions, competitions, etc.
?? WHO DECIDES ??

20. TIPS FOR A WINNING AND PROFITABLE PROPOSAL
effect
WORKSHOP
What is the current consumption of energy drink?
What is the current deal with RB?
Find out who the decision maker is, or are there two?
Understand clearly what is important to each decision maker
Try to keep the price high and avoid trade offers if you can
If you need to incentivate the manager, make it volume dependent (volume incentives)
Giving cases is better than giving cash, because the value to the recipient of a case is much higher (e.g. 90) than to you!