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An important part of the analysis of alternatives facing business - to - business marketing decision makers is the financial analysis of these alternatives. This
An important part of the analysis of alternatives facing businesstobusiness marketing decision makers is the financial analysis of these alternatives. This exercise is designed to give managers experience in handling the types of financial calculations that arise in some marketing situations.
You have just been appointed the product manager for the FLEXO brand of lathes in a large industrial products company. As part of your new job, you want to develop an understanding of the financial situation for your product. Your assistant has provided you with the following facts:
a Enduser purchase price $
b Distributors margin
c Jobbers margin
d Wholesalers margin
e Direct factory labor $
f Raw materials $
g All factory and administrative $ per unit at a
overheads unit volume level
h Salespersons commissions of manufacturers selling
price
i Sales force travel costs $
j Advertising $
k Total market for lathes units
l Current yearly sales of Flexo units
An agent who sells to the jobbers, who in turn sell to the distributors.
QUESTIONS
What is the contribution per unit for the Flexo brand of lathes?
What is the breakeven volume in units and in dollars?
What market share does the Flexo brand need to breakeven?
What is the current total contribution?
What is the current before tax profit of the Flexo Brand?
What market share must Flexo obtain to contribute a before tax profit of $ million?
Hints: You can use breakeven analysis to answer most of the questions. You need to calculate the manufacturers selling price by subtracting the distributors jobbers and wholesalers margins, in that order, from the endusers price. Factory and administrative overheads are fixed costs $ do not adjust it for volume.EXERCISE ON FINANCIAL ANALYSIS FOR
MARKETING DECISION MAKING
An important part of the analysis of alternatives facing businesstobusiness marketing
decision makers is the financial analysis of these alternatives. This exercise is designed to
give managers experience in handling the types of financial calculations that arise in
some marketing situations.
You have just been appointed the product manager for the "FLEXO" brand of
lathes in a large industrial products company. As part of your new job, you
want to develop an understanding of the financial situation for your product.
Your assistant has provided you with the following facts:
a Enduser purchase price
b Distributor's margin
c Jobber's margin
d Wholesaler's margin
e Direct factory labor
f Raw materials
g All factory and administrative
overheads
h Salesperson's commissions
i Sales force travel costs
j Advertising
k Total market for lathes
Current yearly sales of Flexo
$
$
$
$ per unit at a
unit volume level
of manufacturer's selling
price
S
$
units
units
An agent who sells to the jobbers, who in turn sell to the distributors.
QUESTIONS
What is the contribution per unit for the Flexo brand of lathes?
What is the breakeven volume in units and in dollars?
What market share does the Flexo brand need to breakeven?
What is the current total contribution?
What is the current before tax profit of the Flexo Brand?
What market share must Flexo obtain to contribute a before tax profit of $
million?
Hints: You can use breakeven analysis to answer most of the questions. You need to
calculate the manufacturer's selling price by subtracting the distributor's, jobber's and
wholesaler's margins, in that order, from the endusers price. Factory and administrative
overheads are fixed costs $ do not adjust it for volume.
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