first operating statement corporate home and domestic markets ted mitchell
TRANSCRIPT
First Operating StatementCorporate
Home and Domestic MarketsTed Mitchell
The Heart of Analysis
Operating Statements
(aka Income Statement)
Corporate Level StatementHome Market Statement
Domestic Market Statement
Foreign Market Statement
Corporate level Inputs and Outputs
Quantity sold 145,551
Variable Cost (33.94) 33.94
Bidding Price noneQty available for Bidding none
Current Product Quality Version #0
Product Development $900,000
Total Industry Expenditures on Development
$7,200,000
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, G 9,718,210
Total Promotion Expense, ME 10,820,000
Profit after Promotion, M (1,101,790)
Total Product Development, R&D
900,000
Net Profit, Z ($2,001,790)
Corporate Operating Statement
Total Quantity sold, Q 145,551
Revenue $14,658,210
Total Cost of Goods Sold (33.94 x Q) 4,940,000
Gross Profit Margin 9,718,210
Total Promotion Expense 10,820,000
Profit after Promotion (NMC) (1,101,790)
Research & Development 900,000
Net Profit ($2,001,790)
You are in the RED!Home Domestic or Both?
First Home Operating Statement
Quantity sold, Q 77,931
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 Expense 5,760,000
Profit after Promotion (NMC) 167,432
Market Research 0
Net Profit (without share of Product Development)
167,432
First Domestic Operating Statement
Quantity sold, Q 67,620
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 Expense 5,060,000
Profit after Promotion (NMC) (1,269,223)
Market Research 0
Net Profit (without share of Product Development)
(1,269,223)
Comparison of Two PerformancesHome Domestic
Quantity sold, Q 77,931 67,620Revenue $8,572,410 $6,085,800Total Variable Cost (33.94 x Q) 2,644,978 2,295,023Gross Profit Margin 5,927,432 3,790,777
Total Promotion Expense 5,760,000 5,060,000Profit after Promotion (NMC) 167,432 (1,269,223)Market Research 0 0Net Profit (without share of Product Development)
167,432 (1,269,223)
Inputs and Outputs Domestic Market
Selling Price 90
Advertising 2,000,000
Consumer Promotion 1,500,000
Sales Force 7 x 80,000 560,000
Dealer Promotion 1,000,000
Total Promotion Expense 5,060,000
Market Research 0
Quantity sold 67,620
Variable Cost per Unit (33.94) 33.94
Inputs and Outputs Home Market
Selling Price per Unit 110
Advertising 1,500,000
Consumer Promotion 2,500,000
Sales Force 7 x 80,000 560,000
Dealer Promotion 1,200,000
Total Promotion Expense 5,760,000
Market Research 0
Quantity sold 77,931
Variable Cost per Unit (33.94) 33.94
Inputs and Outputs Both Markets
Home DomesticSelling Price per Unit 110 90Advertising 1,500,000 2,000,000Consumer Promotion 2,500,000 1,500,000Sales Force 7 x 80,000 560,000 560,000Dealer Promotion 1,200,000 1,000,000Total Promotion Expense 5,760,000 5,060,000Market Research 0 0Quantity sold 77,931 67,620Variable Cost per Unit (33.94) 33.94 33.94
Inputs and Outputs Both Market
Home DomesticSelling Price per Unit 110 90Advertising 1,500,000 2,000,000Consumer Promotion 2,500,000 1,500,000Sales Force 7 x 80,000 560,000 560,000Dealer Promotion 1,200,000 1,000,000Total Promotion Expense 5,760,000 5,060,000Market Research 0 0Quantity sold 77,931 67,620Variable Cost per Unit (33.94) 33.94 33.94
When you have lower Price Will you sell more stuff?
Inputs and Outputs Both Market
Home DomesticSelling Price per Unit 110 90Advertising 1,500,000 2,000,000Consumer Promotion 2,500,000 1,500,000Sales Force 7 x 80,000 560,000 560,000Dealer Promotion 1,200,000 1,000,000Total Promotion Expense 5,760,000 5,060,000Market Research 0 0Quantity sold 77,931 67,620Variable Cost per Unit (33.94) 33.94 33.94
When you have More Advertising
Will you sell more stuff?
Inputs and Outputs Both Market
Home DomesticSelling Price per Unit 110 90Advertising 1,500,000 2,000,000Consumer Promotion 2,500,000 1,500,000Sales Force 7 x 80,000 560,000 560,000Dealer Promotion 1,200,000 1,000,000Total Promotion Expense 5,760,000 5,060,000Market Research 0 0Quantity sold 77,931 67,620Variable Cost per Unit (33.94) 33.94 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?
Inputs and Outputs Both Market
Home DomesticSelling Price per Unit 110 90Advertising 1,500,000 2,000,000Consumer Promotion 2,500,000 1,500,000Sales Force 7 x 80,000 560,000 560,000Dealer Promotion 1,200,000 1,000,000Total Promotion Expense 5,760,000 5,060,000Market Research 0 0Quantity sold 77,931 67,620Variable Cost per Unit (33.94) 33.94 33.94
What does Market Research say about the upper limit
for dealer promotion?
Inputs and Outputs Both Market
Home DomesticSelling Price per Unit 110 90Advertising 1,500,000 2,000,000Consumer Promotion 2,500,000 1,500,000Sales Force 7 x 80,000 560,000 560,000Dealer Promotion 1,200,000 1,000,000Total Promotion Expense 5,760,000 5,060,000Market Research 0 0Quantity sold 77,931 67,620Variable Cost per Unit (33.94) 33.94 33.94
When the Markets are different,Then they will have different levels
Of sensitivity to effort!!
Customer Sensitivity to Marketing Mix
Home DomesticChanges in Selling Price Little Very Advertising Very LittleConsumer Promotion Moderate VerySales Force 80,000 Little ModerateDealer Promotion Little LittleTarget Total Promotion Expense
2,650,000 2,900,000
Price SensitivityQuantity
Selling Price
Domestic Market
A change in price results in a change in quantity sold
Price SensitivityQuantity
Selling Price
Domestic Market
Home Market
Price SensitivityQuantity
Selling Price
Domestic Market
Home Market
Customer Sensitivity to Marketing Mix
Home DomesticChanges in Selling Price Little Very Advertising ?????? Very LittleConsumer Promotion Moderate VerySales Force 80,000 Little ModerateDealer Promotion Little LittleTarget Total Promotion Expense
2,650,000 2,900,000
Customer Sensitivity to Marketing Mix
Home DomesticChanges in Selling Price Little Very Advertising Very LittleConsumer Promotion Moderate VerySales Force 80,000 Little ModerateDealer Promotion Little LittleTarget Total Promotion Expense
2,650,000 2,900,000
Advertising SensitivityQuantity
Advertising
Domestic Market
A change in price results in a change in quantity sold
Advertising SensitivityQuantity
Advertising Effort
Domestic Market
Home Market
Customer Sensitivity to Marketing Mix
Home DomesticChanges in Selling Price Little Very Advertising Very LittleConsumer Promotion ????? Moderate VerySales Force 80,000 Little ModerateDealer Promotion Little LittleTarget Total Promotion Expense
2,650,000 2,900,000
Customer Sensitivity to Marketing Mix
Home DomesticChanges in Selling Price Little Very Advertising Very LittleConsumer Promotion Moderate VerySales Force 80,000 Little ModerateDealer Promotion Little LittleTarget Total Promotion Expense
2,650,000 2,900,000
Customer Sensitivity to Marketing Mix
Home DomesticChanges in Selling Price Little Very Advertising Very LittleConsumer Promotion Moderate VerySales Force 80,000 ??????? Little ModerateDealer Promotion Little LittleTarget Total Promotion Expense
2,650,000 2,900,000
Customer Sensitivity to Marketing Mix
Home DomesticChanges in Selling Price Little Very Advertising Very LittleConsumer Promotion Moderate VerySales Force 80,000 ??????? Little ModerateDealer Promotion Little LittleTarget Total Promotion Expense
2,650,000 2,900,000
Customer Sensitivity to Marketing Mix
Home DomesticChanges in Selling Price Little Very Advertising Very LittleConsumer Promotion Moderate VerySales Force 80,000 Little ModerateDealer Promotion ????? Little LittleTarget Total Promotion Expense
2,650,000 2,900,000
Customer Sensitivity to Marketing Mix
Home DomesticChanges in Selling Price Little Very Advertising Very LittleConsumer Promotion Moderate VerySales Force 80,000 Little ModerateDealer Promotion ????? Very Little LittleTarget Total Promotion Expense
2,650,000 2,900,000
Customer Sensitivity to Marketing Mix
Home DomesticChanges in Selling Price Little Very Advertising Very LittleConsumer Promotion Moderate VerySales Force 80,000 Little ModerateDealer Promotion Very Little LittleTarget Total Promotion Expense
2,650,000 2,900,000
Questions
Know upper and lower limits of marketing effort.
Know customer sensitivity to Changes in marketing effort