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BSBMKG501 Identify and Evaluate Marketing Opportunities Assessment 2

BSBMKG501

Identify and Evaluate Marketing Opportunities

Assessment Task 2

STUDENT to complete this section
Student Name
Student ID
Trainer Name
Date Submitted
Candidate declaration— By signing below, I declare that: I have been advised of the assessment requirements, have been made aware of my rights and responsibilities as an assessment candidate, and choose to be assessed at this time this assessment work is my own and contains no material written by another person except where due reference is made. I am aware that a false declaration may lead to the withdrawal of a qualification or statement of attainment. Signed: …………………………………………………….. Date: ………………………….
ASSESSOR to complete this section
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Assessment Sections	First Attempt	Second Attempt
Task 2	Competent NYC	Competent NYC

Assessment 2: Evaluate Marketing Opportunities

In this task you will evaluate two marketing opportunities for the simulated business,

Scenario

You are the marketing manager at BBQfun. You and your team have identified three marketing opportunities to evaluate. They are:

1. Manufacture and sell own brand

The first opportunity is to manufacture and retail own-branded barbecues and products. Manufacture would take place at a leased plant in India as BBQfun has no manufacturing capability. Also, manufacture in Australia is too expensive.

2. Sell products through e-commerce

The second opportunity is to offer all products in an online store. Stock could be stored at no extra cost at existing stores. Customers would cover delivery costs.

3. Bargain price

This option give customers much lower prices without increasing overheads significantly.

To effectively evaluate each of these options, you will use a range financial data and formulas. Your first task is to complete the following worksheets.

1. Profit Worksheet

2. Profitability Index

3. Break-even Calculations

4. Sales Volume

Once complete, you will present your findings and final recommendations to key

stakeholders within the company in a Management Report.

1. Profit Worksheet

BBQfun Profit Worksheet
Marketing Opportunity	Own brand	E-commerce	Bargain
Number of units sold
BBQ	7,200	10,000	10,000
Furniture	3,250	5,000	5,000
Accessories	14,000	10,000	17,500
Price per unit
BBQ	600	620	500
Furniture	850	880	650
Accessories	50	55	40
Sales
BBQ
Furniture
Accessories
Total Sales
Variable cost per unit
BBQ	500	300	200
Furniture	600	420	220
Accessories	40	20	10
Variable Cost for Total Units Sold
BBQ
Furniture
Accessories
Total Variable Cost (3 products)
Contribution Margin (CM) Calculations
CM = P – V P = Price V=variable costs	BBQ
	Furniture
	Accessories
Total Contribution Margin (3 products)
Gross Profit Calculation
Gross Profit = CM x No of units	BBQ
	Furniture
	Accessories
Gross Profit per Idea
Total Gross Profit
Fixed Costs
Expense Item	Additional Fixed Costs
Training
Warehouse / Office renovations		50,000
On- line store		100,000
Salary	500,000	250,000	300,000
Lease	1,000,000
Additional Fixed Costs	$ 1,500,000		$ 300,000
014/2015 Budgeted Fixed Costs
Total Fixed Costs
Net Profit Calculation
Net Profit = Gross Profit – Fixed Costs
Total Net Profit

2. Profitability Index

Profitability Index Calculation
Profitability Index = Present value (PV) of future cash flows Present value (PV) of initial investment
Marketing Opportunity	Own brand	E-commerce	Bargain
Present value (PV) of future cash flows (Use Gross Profit)
Present value of initial investment (use total fixed costs)
Profitability index P < 1 = Not viable P > 1 = Viable

3. Break-even Point Calculation

Break-even Point Calculation
Number of units required to break-even = FC CM
Marketing Opportunity	Own brand	E – commerce	Bargain
Fixed Costs
Contribution Margin (3 products)
Result
Sales Break-even Calculation
Sales required to break-even = FC CMR
Marketing Opportunity	Own brand	E-commerce	Bargain
Fixed Costs
Contribution Margin Ratio Sales – Total variable costs Sales
Result

3a. Break-even Graph - Own brand

3b. Break-even Graph - E-commerce

3c. Break-even Graph - Bargain

4. Sales Volume

Units required to reach profit
Number of units required to reach profit = FC + Profit CM
Marketing Opportunity	Own brand	E-commerce	Bargain
Fixed Costs + Profit
Contribution Margin
Result
Units required to reach profit
Sales required to reach profit = FC + Profit CMR
Marketing Opportunity	Own brand	E-commerce	Bargain
Fixed Costs + Profit
Contribution Margin Ratio
Result

Appendix 1:

BBQfun

Profit and Loss Budget

2014/15

Area	Amount	Fixed / Variable
Income
Sales	11,000,000
Cost of goods sold (COGS)	5,890,000
Gross profit	$6,677,000
Expenses
Wages On-Cost Wages Salaries On-Cost Salaries	985,000 98,500 1,200,000 120,000
Consultancy fees	50,000
Communication expenses	42,000
Marketing	800,000
Rent	1,000,000
Office Supplies	65,068
Staff Training	62,187
Total Expenses	$4,587,145
Net profit (before tax)	$2.089,855

Jabin Hopkins Institute of Technology 1