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Budget implication: Promotional expenditure is planned to maximise response at the
beginning of the year, followed by continuous advertising to continue to maintain the
highest level of threshold. Expenditure will follow the pattern in Table 14 G .
Table 14G. Crazy Foods promotional expenditure (£'000) per month.
1
2
3
4
5
6
7
8
9
10
11
12
200
100
100
100
100
100
100
100
100
100
100 100
There is no requirement for sales promotion - direct mail, leafleting via samples, public
relations or sponsorship all considered ineffective at the period of the product
development.
Contingency
Likely failure points are declining sales due to changing demand, competitive activity,
product failure. Company has established information system to isolate the component,
introduced quality control system to reduce product failure. 5 per cent of revenue set aside
for additional promotional activity.
Crazy Foods - marketing budget
Cash flow forecast
From the creation of the marketing structure, the marketing manager can create a cash
flow forecast. The result is provided in Table 14H.
Table 14H. Crazy Foods - Cash flow forecast in millions by month – except price which
refers to unit pricing
1
2
3
4
5
6
7
8
9
10
11
12
Units
99
99
99
99
99
99
99
99
99
99
99
99
Advertising sales
10
10
10
10
10
10
10
10
10
10
10
10
Sales promotion
0.2
0.2
0.2
0.25
0.25
0.25
Price (p)
23.2
23.2
23.2
23.2
23.2
23.2
23.2
23.2
23.2
23.2
23.2
23.2
Revenue £
2.5
2.5
2.5
2.5
2.5
2.5
2.5
2.5
2.5
2.5
2.5
2.5
Variable cost £
Delivered cost
2
2
2
2
2
2
2
2
2
2
2
2
Gross profit
0.5
0.5
0.5
0.5
0.5
0.5
0.5
0.5
0.5
0.5
0.5
0.5
Promotion cost
0.1
0.1
0.1
0.1
0.1
0.1
0.1
0.1
0.1
0.1
0.1
0.1
NPD cost
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
Contingency
0.02
0.02
0.02
0.02
0.02
0.02
0.02
0.02
0.02
0.02
0.02
0.02
Total flow
0.38
0.38
0.38
0.38
0.38
0.38
0.38
0.38
0.38
0.38
0.38
0.38
Financial benchmarking
Benchmarking the financial results against the competition suggests the company is
performing well. Gross margins are higher than main competitors', return on capital higher,
and stock turns much better. Debtor and creditor lengths pose no problems, liquidity ratios
are equal or better. The implication of this analysis is that there are few problems that
need to be resolved during the optimisation exercise.
Revenue centres
Crazy Foods can separate its revenues geographically. Analysing the business on this
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