Cottle-Taylor

The company started off producing 20,000 units of mountain bikes. We did not change the production quantity. Last year our forecast sales were 24,000 when we only sold 19,866; therefore we thought it would be best to leave production at 20,000 bikes. Having excess inventory, we concluded that 20,000 units should be enough considering our quality has not changed and our advertising will not increase the sales dramatically. Although we had the choice to produce as much as 30,000 units, we felt as though we did not have sufficient money to increase production. We were interested in allocating the money towards marketing as opposed to production. We realized that without awareness, no matter how many units we make, sales would be inefficient.

After a period of declining sales for Allround, we increased the advertising budget to be consistent with our competitor’s budget. We decided to be very consistent with our strategy over the ten periods; however, in hindsight we should have implemented a more dynamic strategy that factored in the changing

While it is true that Ms. Forthright had always exceeded her budgeted sales, the extent to which she diverts away from the managers projections does not necessarily means that she is violating honesty and integrity. Her decision on what her budgeted sales for the year is highly relevant to the data available to her. Her projections tends to lie between the field manager and the marketing manager’s predictions, which can be reasonable because in the past years, the field manager’s projections tend to be over what the actual sales of the year will be.

1. Increase revenue by 16% in 2012 through retail expansion; following increases in revenue of 15%, 16%, and 14% in 2009, 2010, and 2011, respectively (Please see Appendix A).

Thank you for the opportunity to assess your sales data in order to provide recommendations for increasing your sales. The analysis and recommendations below are based on the data you provided, which covers a period from May 2004 through June 2006. The analysis below is based on this data alone. Therefore, our recommendations should be tempered by your knowledge of business realities and your market. Please let us know if we can answer any questions concerning the analysis or the recommendations provided.

Probably increase marketing, promotional and expenses related to discounts in the subsequent year due to “Premier Vision” plan.

If we analyze the numbers now we see that there are small changes, by the end of the first year, in Q4 we get $15.2m instead of $15.1, a subtle change but still a faster result. The market share is 6.46% in Q3 instead of 6.40%. This way we can get results faster. However, I would not recommend the advertising manager to do this as it gives a poorer end result. By the end of the third year we get a result of $57.1m in profit where we made $57.2m if we weight short term the same as long term. Also the final market share is 7.65% instead of 7.66%, a small change albeit, but still no reason to choose scenario 3 over scenario 2.

The biggest challenge that they face as a company is they do not have the room the increase expenditure by such a vast amount. Currently there is $3,675,000 in promotional dollars allocated as follows; sales and administration expense (995,000), cooperative advertising programs with retailers (1,650,000), consumer advertising (562,000) and trade promotion (467,000). adding the $225,000 increase in consumer advertising will not allow the 5% of expected sales for total promo expenditures. John Bott, the vice president of sales disagreed with the budget allocation and noted that sales expenses and administration cost were projected to be $65,000 in 2008. This led him to believe that an additional sales representative would be needed to service company accounts because 50 were being added. Therefore he estimated this addition would cost at least $70,000 including salary and expenses in 2008. Bott also stated that “That's about $135,000 in additional sales expense that have to be added to our promotional budget for 2008”

Lastly, the company suggest to expand their current inventory through increasing production and capacity. With the increase in production rate the company can gain more consumers as a whole through supply and demand. Doing this would give the company an opportunity for more exposure and perhaps better brand recognition.

Suggest key actions that management should take in order to confront these circumstances. Provide a rationale for your response. (Hint: Your firm’s price must cover average variable costs in the short run and average total costs in the long run to continue operations.)

Jones Blair has the responsibility to analyze these options to evaluate the effect on the overall business operations within the firm. The VP of Advertising’s suggestion of $350k increase in to the marketing budget would create an increase in $1 million dollars to recoup the cost of this venture. His philosophy of accessing the do-it-yourselfers would not bring these individuals away from their primary focus which is retail location. The do-it-yourselfers are going to continue to visit Home Depot and other mass marketing stores despite advertising efforts. The cost benefit analysis would not be beneficial to Jones Blair.

Butler should take on the expansion plan. The reason is that it provides nearly double the amount of capital than the previous line of credit provided by Suburban National Bank (about $215,000 more). Within the case, the advertising costs aren’t discussed; however it is mentioned that the company does all of its sales via telephone, excluding any sales representatives in their selling process. So one way that Butler could help push sales revenue even further was if the company were to hire either one or even multiple sales representatives to help push out the product to customers. If the cost of having sales representatives is a bit too high, the company could either limit the amount of sales representatives it needs to sell the products to customers, or it could try to hire sales representatives for the six month period in which 55% of the company’s revenue is generated.

In other words, sales growth, particularly the sales growth of the company as a whole, should be used to evaluate the alternative. Another evaluative criterion is tied to the company's image. For example, will the company's image be tarnished, improved, or stay the same. Lastly, feasibility is another criterion to be used to evaluate the alternative.

The end of the first year, we had 30% of the products left, in view of the traditional market accounted for 40.5% of the overall toothpaste market, we decided to increase three sales people into traditional sales channels in the next year. Due to the selling of whole market Economy toothpaste are great, we add advertising investment. At the same time, the poor sell of children's toothpaste prompted us to reduce 5 million budgets on its advertising fee. According to the results of marketing, and sales of other companies, appropriate to improve the economy, white, healthy toothpaste price and their allowance, try to stimulate the sales.

Another option to consider is to increase the marketing budget beyond 15% as a direct response to Unilever’s marketing expenditure increase in 2006. This increase in marketing expenditure could also lead P&G to reach the recommended 120 GRP’s in television advertising. P&G could also use this extra advertising budget to strongly increase trade sales promotions in an attempt to balance out Unilever’s greatly increased trade sales promotions from the prior year.