fau analysis

23

Click here to load reader

Upload: xebra

Post on 18-Apr-2015

294 views

Category:

Documents


1 download

TRANSCRIPT

Page 1: Fau Analysis

1. SWOT Analysis

Strengths:

a) The four partners were deeply interested in Marketing Planning

and Strategy and were committed to work hard to make the project

so successful that it pays for their tuition.

b) The four partners have formed a strong partnership to start a small

business.

c) They performed good amount of analysis on what product to select

for their business.

d) They selected a product which had no competition and the sports

calendar market was untapped in Florida Atlantic University

(FAU).

e) The four partners had good amount of marketing research

available.

f) There was way to advertise the product and also do additional

sales renting booths at FAU events. The success of this work

dependent on partners’ commitment, which was there for sure.

Weaknesses:

a) The product was new in an untested market. There was no

historical guidance on how product would perform at FAU.

b) The time period to sell calendars was short and the duration was

only two months in fall when the semester started.

c) There are lots of questions unanswered about marketing plan.

d) If the students choose to retail the calendars themselves it would

mean they have to put extra hours of work. Also it will be tedious

Page 2: Fau Analysis

work since they can carry only 10-12 calendars in their backup and

they have to rely on slow personal contact selling.

e) There was no fair idea about how to advertise the new product.

f) The critical decisions on type of calendar to make and on what kind

of athletes was not made.

g) There was only $8000 available in startup capital. And students

need to make at least profit of $8,000 to cover the startup capital

or break even, and $18,000 to pay for the capital and tuition, which

was the ultimate goal.

Opportunities:

a) There was no official sports calendar at FAU. The product could be

so successful that it would become annual product to sale at the

FAU.

b) The FAU bookstore was selling two types of calendars, and the

existing calendars were themed in way not very attractive to

university students.

c) There was unfulfilled market waiting to be captured for the FAU

sports themed calendar.

d) 76.9% of students as per survey showed interest to buy the

calendar. That showed a possible immense market for 16,700

calendars. (See Exhibit 3: Survey Results)

e) Around 198 students among those surveyed were ready to fork at

least $8 buy the calendar.

f) Sales figures from other University showed realistic expected

revenue per student to be from $1.42 to $1.94.

g) Bookstore was selling 3500 calendars, which generated $31,905 in

revenues which translated to per student calendar expenditure of

$1.45.

Page 3: Fau Analysis

h) The FAU book store was ready to buy their product in bulk. That

meant $9,000 in low risk revenues and would possibly pay back the

$8,000 partners investment right way. (

See Exhibit 1: Current Calendar Sales at Bookstore)

i) The printer was willing to give them 30 days credit for paying the

printing bill.

Threats

a) Other groups or organization can think of creating and market

same type of calendar.

b) If the partners go with bookstore then lot of pricing power will be

surrendered to the university bookstore.

c) It is not clear if FAU was going to claim royalty on athletes’

pictures. If FAU does then there will be additional cost.

d) The calendars may not be accepted thus idea could flop and

investment will fail.

e) The survey which showed 76.9% of students will buy the calendar

was highly exaggerated, because it translated to 16,720 calendars.

(See Exhibit 3: Survey Results)

f) How FAU sports team performed in the games and how those

sportsmen behaved in the public could impact calendar sales

unexpectedly.

2. Segmentation and targeting.

These are the variables which can be used for marketing

segmentation:

1. What gender? Male or Female.

2. Which campus? Boca Raton or Davie or Jupiter or other.

Page 4: Fau Analysis

3. What is class standing? Freshman or sophomore or junior or senior

or graduate or unknown?

4. Does the student like sports (or will buy Sports calendar)? Yes or

no?

76.9% of students are interested in buying calendar. If

extrapolated to 22,000 students the number of students buying the

calendar will be 16,720 students. But based on calendar sales from

other universities around 20% to 29% will be willing to buy the

calendar. That translates to a realistic count of 4,400 to 6,380

calendars. (See Exhibit 2: Calendar Sales at other Universities.)

Among respondents, 60.87% are females and 39.13% are males.

More females, 68% from cross tabulation data, are interested in

buying calendars. This gives hint about product placement. If booths

are to be rented then the retail stalls should be set up near events and

seminars mostly attended by females. Retail stalls can also be rented

near nursing and education schools.

69.2% of respondents were from Boca Raton campus and they also

comprise 68% of all students. Hence most of the advertisement and

product placement in events need to be done at Boca Raton. This also

reduces the expected count of calendars to be sold. We get count of

3,300 to 4,350 calendars on applying the same percentages that of

other universities again. We need to remember that 18.97 for survey

respondents stay in Davis. This too can be targeted to generate sales

of 836 to 1,212 calendars.

3. The Marketing Mix

Page 5: Fau Analysis

a. Calendar Subject

31.24% of students want all female calendar and 42.69% want

all male calendar. Since there is not a big majority in particular

preference, we recommend 40% female athletes and 60% male

athletes. This mix should also attract to remaining 26.09% of

respondents.

Some of the pictures male or female need to be synchronized

with the time when a particular sport is played. For example fall

should depict football players; spring could depict both male and

female basket ball players.

70.36% of students prefer athletes in uniform, so the calendar

should have pictures of athletes wearing the uniform. 24.51%

preferred swimsuits models.

One fact to note is U of M generates highest revenue of $1.94

per student with all female swimsuit models, followed next by U if O

with revenue of $1.67 per student with all male athletes. We have

already decided to go with mix of male and female athletes in the

calendar. And in light of this fact, we need to have some pictures of

female athletes in swimsuits with other pictures of male only athletes

in uniforms.

b. Calendar Publish Time

77.87 % of respondents preferred the calendar to coincide with

school start year. Hence the calendar should be made accordingly.

Page 6: Fau Analysis

c. Calendar Pricing

From data of other universities, we gather that around 27% of

students buy the calendar when price is $7 or $5. . (See Exhibit 2:

Calendar Sales at other Universities.) And from our survey we find that if

the calendar is priced at $8, then the percentage of respondents

buying the calendar is 1.19% + 18.97% + 58.10 = 78.26%. The price

of $8 will also appeal the buyers who preferred $10 and $12 prices.

(See Exhibit 4: Demand Curves.)

From other university data (or the demand graph we have),

when the price is $8, around 20% or 4,840 students will like to buy

the calendar. The price of $8 will also undercut bookstore price of

existing calendars.

As far as the quality is concerned, we recommend heavy stock

similar to that of U of C which has the most attractive calendar and

also to be same as that of U of M which had highest revenue per

student.

d. Distribution Options

There are three ways to distribute the calendars. First is

to do bulk sale to the book store, other one is to rent booth at

important university events and third is to do person to person selling.

The unit sales at U of O were highest. There 28% of students brought

the calendar and the revenue per student was 2nd highest. It had used

multiple distribution systems.

Looking at other universities, it looks like 5000 is achievable

target. U of M has 18,000 students and was able to sell 5,000

Page 7: Fau Analysis

calendars. So, 5,000 among 22,000 FAU students will be very

reachable. Out of 5,000 calendars, 3,000 can be sold at the book store

and remaining at event booths and person to person selling. (See

Exhibit 2: Calendar Sales at other Universities.)

Count of 5,000 is quantity selected since that is the minimum

count for printer’s run. And bookstore is also selected as since it will

not be possible to sell 5,000 calendars person to person and through

booth. We estimate using 20 stalls at the cost of $200 with the

expectations that each time, stall will be able to sale around 75

calendars. We estimate around 1500 calendars to be sold through

booths. Remaining 500 can be sold through person to person sales.

That comes to 125 calendars for each partner in person to person

sales. And 125 calendars for period of two months or eight weeks is

like selling 3-4 calendars per working day of the week, which sounds

reasonable.

e. Promotions

We have understood that the booths to sell calendars need to be

set near events where high female students are present. The FAU

newspaper’s editor needs to be contacted and if possible

article/interview about new upcoming FAU calendar need be

published. This will give some free publicity the new calendar. Some

300 flyers need to be printed, and posted and handed out around Boca

Raton and Davie Campuses. The flyers are to be followed with

newspaper advertisement of size eight page, costing $500. The

newspaper advertisement needs to appear a day before launch of the

calendar.

Page 8: Fau Analysis

Some of the venues for distribution need to be in the events

attended by most juniors, seniors and graduates. These groups of

potential customers make up 61.26% of the respondents. For example

if there is job related event, then booth can be opened to sell

calendars to seniors.

f. Summary

We suggest the partners to publish large size heavy stock $8.00

calendar with both male and female athletes. The calendar needs to

match the school starting year of August. Both Boca Raton and Davie

campuses are the target markets for the calendar.

Page 9: Fau Analysis

4. Sensitivity   analysis

a. Break Even Volume Analysis

From the “Exhibit 5: Calendar Costs Calculations”, we find that the

total costs for run of 5000 calendars will be $13,715.

Since the book store will buy 3,000 calendars at $3.00 each, the

sale to book store will generate $9,000. Remaining money to cover for

cost of printing is $13,715 - $9000 = $4,715. At $8.00 each, the

remaining quantity to sell to get to break even is 590.

The break even volume is 3590, in which 3,000 are from book

store sales and 590 are from booths or person to person sales.

b. Profit with 5,000 sold calendars

After 3590 calendars are sold, the remaining 5,000 – 3,590 =

1,410 if sold will be the profit for the partners. That amount will be

$11,280. This exceeds the original goal of collecting $10,000 for

tuition by $1,280.

c. Volume to achieve Target Goal of $10,000 Tuition

To get to target profit of $10,000, the students need to sell

10,000/8= 1250 extra calendars. Adding 1250 to 590 and 3000 the

ones for break even volumes, we get 1840 to be sold at booth/person

to person and 3000 to be sold at book store to cover cost and reach

target profit. Total sales of calendar will be 4840 to cover cost and get

$10,000 for tuition.

Page 10: Fau Analysis

If all calendars are sold, then (5000 - 4840)* $8= 160 * $8 =

$1,280 will be extra bonus to the partners.

d. Conclusion

The expected cash flow with approximate dates is shown in Exhibit

7. And the way all 5000 calendars will be disbursed is shown in

“Exhibit 8: Calendar Distribution Channels” and with the help of pie

chart in “Exhibit 9: Distribution Channel Pie-Chart”

Page 11: Fau Analysis

Exhibit 1: Current Calendar Sales at Bookstore:

Current Bookstore Calendar

Sales

Hallmark

150

0

$9.9

5

$14,925.

00

American Greetings

200

0

$8.4

9

$16,980.

00

Total Sales    

$31,905.

00

Per Student Calendar

Revenue     $1.45

% of Students buying

Calendar     15.91

Exhibit 2: Calendar Sales at other Universities:

  U of T U of C U of M U of O

Market Size 28,000 36,000 18,000 32,000

Selling Price 9.95 8 7 5.95

Calendars Sold 4,000 7,000 5,000 9,000

Total Revenue $39,800.00

$56,000.00

$35,000.00

$53,550.00

% of Student buying Calendars

14.29 19.44 27.78 28.13

Revenue per Student

$1.42 $1.56 $1.94 $1.67

Type Of Calendar Both (Campus

)

F (Swimsui

t) M(Head)

Female (Swimsui

t)

Male (Clothed)

Size/Heavy or Light 8 ½” X 11” L

12” X 12” H

8 1/2” X11” H

12” X 12” L

Distribution   Retail Both Retail Both

Page 12: Fau Analysis

Exhibit 3: Survey Results:

Student Survey Results

Question

Cou

nt Out of 329

% in

sampl

e

group

% of total

population

Wants to buy

Calendar 253 253 yes 76.90  

   

Unknown in

each case   23.1

    Out of 253    

What kind of models

do you prefer? 79 all females 31.23 24.01

  108 all males

42.6

9 32.83

  66

both males

and females

26.0

9 20.06

         

What kind of photo

poses preferred? 178

athletes in

uniforms

70.3

6 54.10

  62

athletes in

swimsuits

24.5

1 18.84

  13

dressed

casually 5.14 3.95

         

What starting date

preferred? 56

calendar

starting year 22.13 17.02

  197

school

starting year

77.8

7 59.88

         

Would you buy

calendar 144 for self

56.9

2 43.77

  76 as gift 30.0 23.10

Page 13: Fau Analysis

4

  33 both 13.04 10.03

         

Highest price for

calendar 3 for $12 1.19 0.91

  48 for $10

18.9

7 14.59

  147 for $8

58.1

0 44.68

  55 for $6 21.74 16.72

         

What is your sex 99 Male 39.13 30.09

  154 Female

60.8

7 46.81

         

Which Campus

attended? 175 Boca Raton

69.1

7 53.19

  48 Davie 18.97 14.59

  29 Jupiter 11.46 8.81

  4 other 1.58 1.22

         

What is class

Standing 35 freshman 13.83 10.64

  21 sophomore 8.30 6.38

  58 junior

22.9

2 17.63

  66 senior

26.0

9 20.06

  31 graduate 12.25 9.42

  42 unknown 16.60 12.77

Page 14: Fau Analysis

Exhibit 4: Demand Curves:

Calendar Demand Curve

0

2

4

6

8

10

12

4,000 5,000 7,000 9,000

Quantity Sold

Ca

len

da

r P

ric

e

Page 15: Fau Analysis

Demand Curve Against % of Student Purchase

0

2

4

6

8

10

12

14.29 19.44 27.78 28.13

% of Student Buying Calendar

Cal

enda

r P

rice

Exhibit 5: Calendar Costs Calculations:

Calendar Printing Costs

Fixed Cost

Estimates      

       

 

Cost of newspaper

advertisement 1 500.00

  Flyers @0.05 300 15.00

 

Cost of twelve

professional snaps  

3,000.0

0

 

Booth Costs for 20

[email protected] 200.00

  Total Fixed Cost  

3,715.0

0

Page 16: Fau Analysis

Variable Cost

Estimates      

 

Variable Printing Costs

@2.00 5000

10,000.

00

       

  Total Costs  

13,715.

00

Page 17: Fau Analysis

Exhibit 6: Break Even and Target Profit Volume Calculations:

Break Even And Expected Profit

Analysis  

Cost to be recovered

$1371

5

   

Book Store Sell 3000 @$3.00 $9,000

   

Remaining Cost to Cover $4,715

   

Calendars to sell to cover $4715 590

 Break Even Sell = 3000 + 590

3590

Money to be made to get to

expected profit

$23,71

5

= cost + expected profit  

= $13715 + $10,000  

   

Book Store Sell 3000 @$3.00 $9,000

   

Remaining money to be covered

$14,71

5

   

Calendars to sell to cover $14,715

@$8.00 1,840

Page 18: Fau Analysis

Remaining Calendars = 5000 –

(4840)=660

Exhibit 7: Expected Cash Flow Schedule:

Approx. Date   Credit Debit

Balance

Spring Cash in Hand, Start $8,000   $8,000         Late July Photographer Payment   $3,000 $5,000         Early Aug Leaflets   $15 $4,985         Mid Aug News Paper Advert.   $500 $4,485           Event Stalls   $200 $4,285         

Late AugBookstore order Supplied $9,000  

$13,285

         

Mid Sep Sale 590 Calendars $4,720  $18,00

5         

Late Sep Sale 1250 Calendars$10,00

0  $28,00

5         

Late Sep Disburse Tuition  $10,00

0$18,00

5         

Late Sep Disburse Printer  $10,00

0 $8,005         Early Oct Disburse Investment   $8,000 $5         

Early OctSell remaining 160 calendars $1,280   $1,285

Page 19: Fau Analysis

Exhibit 8: Calendar Distribution Channels:

Channel Details

Calendars to be channeled

Book Store   3000

20 Event Stalls

Approximate 75 Calendar sales per stall 1500

Person to Person

Around 125 to be sold by each or the 4 partners 500

       Total 5000

Exhibit 9: Distribution Channel Pie-Chart:

Page 20: Fau Analysis

Calendar Distribution in the Channels

60%

30%

10%

Book Store 20 Event Stalls Person to Person