1. You have been asked to help the company review its sales and profits in the three channels so that they can determine whether they should continue to allocate their marketing funds based on channel dollar sales or change to base allocation of marketing funds on the profit earned in each channel. Their current GOAL is to earn the best profit that they can. Currently, they look at the percent sold in a channel and give that channel the same percent of marketing dollars and they are wondering if they should instead allocate marketing dollars based on the percent of profit earned. As you respond to the questions, keep in mind the purpose, to earn the best profit they can. You are going to help them determine whether they should continue to allocate their marketing dollars to the channels based on the dollar sales in the channel, OR if it would be better to allocate their marketing dollars based on the profit made in the channels. Channel Channel Sales (% of 3D Channel Profit (% of 3D Tech's Total Profits) Tech's Total Sales) 62.5% Electronic Store Chains 48% Independent 22.7% 45% Electronics Stores Select department store chains 14.8% 7% Annual Percentage Change in Sales By Channel Channel 3 years ago 2 years ago Last year Electronic Store Chains +1.6% +2.1% +2.4% Independent +.83% +1.1% +1.25% Electronics Stores Select department store chains +.5% +.3% -.5% a) Keeping in mind their interest in how to allocate marketing funds (by channel sales or by channel profit), describe the key findings from your analysis of this data. For this question, you are NOT making a recommendation, you are explaining WHAT THE DATA TELLS YOU about their current channels of distribution (10 points). I b) Now, following the "steps" below, use the information available to determine (that is calculate) whether the company earns more profit under the current approach (the current model), or would do better if they allocated marketing funds based on Percent of Channel Profit earned (the "new" model). 1. You have been asked to help the company review its sales and profits in the three channels so that they can determine whether they should continue to allocate their marketing funds based on channel dollar sales or change to base allocation of marketing funds on the profit earned in each channel. Their current GOAL is to earn the best profit that they can. Currently, they look at the percent sold in a channel and give that channel the same percent of marketing dollars and they are wondering if they should instead allocate marketing dollars based on the percent of profit earned. As you respond to the questions, keep in mind the purpose, to earn the best profit they can. You are going to help them determine whether they should continue to allocate their marketing dollars to the channels based on the dollar sales in the channel, OR if it would be better to allocate their marketing dollars based on the profit made in the channels. Channel Channel Sales (% of 3D Channel Profit (% of 3D Tech's Total Profits) Tech's Total Sales) 62.5% Electronic Store Chains 48% Independent 22.7% 45% Electronics Stores Select department store chains 14.8% 7% Annual Percentage Change in Sales By Channel Channel 3 years ago 2 years ago Last year Electronic Store Chains +1.6% +2.1% +2.4% Independent +.83% +1.1% +1.25% Electronics Stores Select department store chains +.5% +.3% -.5% a) Keeping in mind their interest in how to allocate marketing funds (by channel sales or by channel profit), describe the key findings from your analysis of this data. For this question, you are NOT making a recommendation, you are explaining WHAT THE DATA TELLS YOU about their current channels of distribution (10 points). I b) Now, following the "steps" below, use the information available to determine (that is calculate) whether the company earns more profit under the current approach (the current model), or would do better if they allocated marketing funds based on Percent of Channel Profit earned (the "new" model)
