In your reply, please answer/discuss the following questions:
- Is the Sonites market growing as fast as it used to be?
Depending on your firm’s strategy, discussone of the two sets of questionsbelow.
- If you decided not to enter the Vodites market, please discuss:
2.1) What was your market share and SPI in period 5?
2.2) Do you consider withdrawing poorly performed brands? Why?
2.3) Did any of your competitors go into the Vodites market? How did it impact their performance?
2.4) Do you think focusing solely on the Sonites market was a wise decision? Why?
- If you decided to enter the Vodites and did so, please discuss:
3.1) Is the Vodites market growing as fast as the Sonites market?
3.2) In the new market, what is your market share?
3.3) In the new market, which customer segment(s) are you targeting? Why?
3.4) Do you think launching products in the Vodites market was a wise decision? Why?
Please answer both questions above.
1 COMPANY DASHBOARD – FIRM T - ALBATROSS – PERIOD 5 2 FINANCIAL REPORT – FIRM T - ALBATROSS – PERIOD 5 The financial statements of firm T published for Period 5 have been prepared on December 31st, Period 5 in accordance with International Financial Reporting Standards (IFRS), as adopted in the Markstrat world. Company Profit & Loss Statement The table below shows the evolution of firm T financial results in thousands of dollars, as well as the cumulative results since Period 0. Period 5 Period 4 Period 3 Period 2 Period 1 Cumulative Revenues 96,180 80,072 74,965 51,730 44,770 386,056 Cost of goods sold -34,970 -28,988 -29,285 -21,362 -19,731 -153,875 Inventory costs -1,412 -91 0 0 0 -1,566 Contribution before marketing 59,798 50,993 45,680 30,368 25,039 230,615 Advertising expenditures -7,831 -4,950 -6,000 -5,684 -4,000 -32,465 Commercial costs -5,708 -3,788 -2,273 -1,273 -1,248 -15,515 Contribution after marketing 46,259 42,255 37,407 23,411 19,790 182,634 Market research studies -835 -804 -758 -451 -505 -3,598 Research and development 0 -9,400 0 0 0 -9,400 Loan capital reimbursed -1,059 0 0 0 0 -1,059 Loan capital received 0 4,498 0 0 0 4,498 Loan interest paid -180 -180 0 0 0 -360 Exceptional cost or profit 0 0 0 0 0 0 Earnings before taxes 44,184 36,369 36,649 22,960 19,285 172,715 Market Contribution The table below shows a comparison of the net contribution generated by the two markets where firm T is marketing products. Sonites Vodites Revenues 92,627 3,553 Cost of goods sold -33,316 -1,654 Inventory costs 0 -1,412 Contribution before marketing 59,312 486 Advertising expenditures -5,781 -2,050 Commercial costs -4,879 -829 Contribution after marketing 48,652 -2,393 Market research studies -435 -364 Research and development 0 0 Net contribution 48,216 -2,757 3 Brand contribution The table below shows a comparison of the net contribution generated by the brands marketed by firm T in Period 5. TONE TOPS TEA Sonites Sonites Vodites Revenues 42,857 49,771 3,553 Cost of goods sold -13,681 -19,635 -1,654 Inventory holding cost 0 0 -1,412 Inventory disposal loss 0 0 0 Contribution before marketing 29,176 30,136 486 Advertising media -3,681 -2,000 -2,000 Advertising research -50 -50 -50 Commercial costs -3,049 -1,830 -829 Contribution after marketing 22,395 26,256 -2,393 Marketing results The section below provides key marketing results for each of your marketed brands Market Shares TONE TOPS TEA Sonites Sonites Vodites Volume Market Share 12.0 % 6.9 % 2.1 % Value Market Share 8.6 % 10.3 % 2.3 % 4 Market Shares TONE TOPS TEA Sonites Sonites Vodites Volume Market Share 12.0 % 6.9 % 2.1 % Value Market Share 8.6 % 10.3 % 2.3 % Distribution Coverage The distribution coverage figures in the chart and table below represent the proportion of distributors who carry a given product. The report gives the information for each brand currently on the market. The number of distributors in each distribution channel is provided as well. TONE TOPS TEA Sonites Sonites Vodites Specialty Stores 48 % 44 % 17 % Mass Merch. 60 % 31 % 25 % Online Stores 51 % 53 % 32 % Specialty Stores Mass Merch. Online Stores Number of distributors 9,111 6,667 1,111 Brand prices The table below shows the prices in $ of your marketed brands. The Recommended Retail Price is the price that you specified in your marketing mix decisions. The Average Retail Price is the average end-user price, taking into account the discount offered by distributors. Finally, the Average Selling Price is equal to the Average Retail Price minus the distribution margins. TONE TOPS TEA Sonites Sonites Vodites Recommended Retail Price $220 $450 $825 Average Retail Price $205 $435 $789 Average Selling Price $138 $281 $518 Loans and Budget Changes The left table below summarizes the loans and/or budget changes that were granted to your company by the instructor. The other table provides the past and future payments made by your company to reimburse the loans. The first column shows the reimbursement of the capital borrowed; the second columns shows the interests paid in the period; the third column indicates how much capital remains to be reimbursed at the end of the period. Budget increase (K$) Budget decrease (K$) Loan capital borrowed (K$) Loan Duration Interest rate (%) Period 0 Period 1 Period 2 Period 3 Period 4 4,498 4 4 Period 5 Period 6 Period 7 Period 8 Period 9 Period 10 5 Capital reimbursed (K$) Interest paid (K$) Capital remaining (K$) Period 0 Period 1 Period 2 Period 3 Period 4 0 180 4,498 Period 5 1,059 180 3,439 Period 6 1,102 138 2,337 Period 7 1,146 93 1,191 Period 8 1,191 Period 9 Period 10 6 PRODUCTION REPORT – FIRM T - ALBATROSS – PERIOD 5 The report below provides with information on production levels and production costs for each of the brands marketed in Period 5. Sales, Production and Inventory The chart below shows the units sold , the production level and inventory level for each of your brands at the end of Period 5. All numbers are given in thousands of units. The table below provides you with additional details such as planned production versus the actual one, and the inventory levels at the beginning and at the end of Period 5. All numbers are given in thousands of units. TONE TOPS TEA Sonites Sonites Vodites Units sold 310 177 7 Production Plan (your decision) 300 200 100 Production 310 167 80 Inventory at beginning of period 0 10 0 Inventory at end of period 0 0 73 Unit Cost, COGS and Inventory Holding Cost The table below shows the unit transfer cost for each of your marketed brands. The “current“ unit cost is the cost of the most recently produced units, while the “average” unit cost takes into account the units that were in your inventory at the beginning of the period. Unit transfer costs are given in $; units sold in thousands of units. COGS (Cost of Goods Sold) are equal to “Units sold” x “Average unit transfer cost”. COGS are given in thousands of $. Finally, this table shows the costs incurred for holding your inventory (storage cost, cost of capital, …). Inventory holding cost is equal to: “Units in inventory” x “Average unit transfer cost” x 8%. It is given in thousands of $. TONE TOPS TEA Sonites Sonites Vodites Current unit transfer cost 44 111 241 Average unit transfer cost 44 111 241 Units sold 310 177 7 COGS 13,681 19,635 1,654 Inventory at end of period 0 0 73 Inventory holding cost 0 0 1,412 7 R&D REPORT – FIRM T - ALBATROSS – SONITES MARKET – PERIOD 5 This report provides information on the activities conducted for your division by the R&D department during Period 5. Projects completed in Period 5 No projects have been completed in Period 5. Projects completed in past periods The projects listed below have been completed in past periods. The ones at the top are currently used as the production platform of one or several of your marketed brands. The ones in italic, if any, are either no longer used or have never been used to produce a brand. Available Since Features (1) Design (2) Battery (3) Display (4) Power (5) Current Minimum Cumulative Budget Platform of Brand POTONE Period 0 18 3 75 25 12 80 72 1,500 TONE POTOPS Period 0 13 8 40 40 75 186 170 2,500 TOPS (1) Features (Number of): From 5 To 20. (2) Design (Index): From 3 To 10. (3) Battery (Hour): From 24 To 96. (4) Display (Inch): From 4 To 40. (5) Power (GFlops): From 5 To 100. Projects partially developed in Period 5 You have no partially completed projects. Shelved projects You have no shelved projects. 8 R&D REPORT – FIRM T - ALBATROSS – VODITES MARKET – PERIOD 5 This report provides information on the activities conducted for your division by the R&D department during Period 5. Projects completed in Period 5 No projects have been completed in Period 5. Projects completed in past periods The projects listed below have been completed in past periods. The ones at the top are currently used as the production platform of one or several of your marketed brands. The ones in italic, if any, are either no longer used or have never been used to produce a brand. Available Since Resolution (1) Energy (2) Carbon (3) Connectivity (4) Apps (5) Current Minimum Cumulative Budget Platform of Brand PETEA Period 4 60 45 10 5 20 238 238 9,400 TEA (1) Resolution (L/mm): From 20 To 100. (2) Energy (BC/Wh): From 10 To 100. (3) Carbon (Kg): From 5 To 50. (4) Connectivity (Index): From 3 To 10. (5) Apps (Number of): From 5 To 100. Projects partially developed in Period 5 You have no partially completed projects. Shelved projects You have no shelved projects. 9 DECISION REVIEW – FIRM T - ALBATROSS – SONITES MARKET – PERIOD 5 This report provides a review of the decisions made by firm T at the beginning of Period 5. Resource Allocation Overview The three charts below show how resources have been allocated across markets, functions and brands. All numbers are given in thousands of dollars. Brand Portfolio TONE TOPS Portfolio operation Maintained Maintained Base project past period POTONE POTOPS Base project this period POTONE POTOPS Marketing Mix TONE TOPS Production planning (in units) 300,000 200,000 Recommended retail price (in $) 220 450 Advertising media (in K$) 3,681 2,000 Advertising research (in K$) 50 50 10 Segmentation Strategy TONE TOPS Explorers 15 % Shoppers 51 % Profs 45 % High Earners 1 % 40 % Savers 48 % Perceptual Objectives TONE TOPS Dimension 1 Design Price Position 1 2.50 6.50 Dimension 2 Display Design Position 2 5.00 6.50 Commercial Team Size The table below shows the number of commercial people allocated to each brand in each channel during Period 5. TONE TOPS Specialty Stores 35 30 Mass Merch. 70 20 Online Stores 20 25 The two charts below show how your commercial team is allocated across channels and brands. All numbers are given in number of salespeople. Market Research Studies – Sonites Market The table below lists the market research studies purchased by firm T in Period 5, as well as the cost in dollars. Purchased Studies Cost in $ Industry benchmarking 35,750 Consumer Survey 71,500 Consumer Panel 119,250 Distribution Panel 71,500 Semantic Scales 12,000 Multidimensional Scaling 41,750 Market Forecast 23,750 Competitive Advertising 35,750 Competitive Commercial Team 18,000 Conjoint Analysis 41,750 11 DECISION REVIEW – FIRM T - ALBATROSS – VODITES MARKET – PERIOD 5 This report provides a review of the decisions made by firm T at the beginning of Period 5. Resource Allocation Overview The three charts below show how resources