LEG 2012: ADDING NEW CONTENT TO MKTG 3700 MARKETING AND MONEY
1. THE FOCAL COURSE
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MKTG 3700 Marketing and Money (M&M) is an undergraduate Marketing Math course.
It is required for marketing majors in the COB. It is taught in face to face and online formats. A majority of students take it face to face. The class is organized, in both instructional formats, into “Learning Modules or LMs”. 5. RESOURCES FOR THE ONLINE CLASS
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Students go through the 11 Learning Modules, released according to the syllabus timeline.
Additional help for solving the mini cases is in the form of Camtasia Audio+Videos (A+Vs). Recorded using the Samson USB Mic.
Most A+Vs are of the professor solving the case by hand on a digital writing tablet.
Other A+Vs demonstrate how to solve mini cases using the professor’s Excel worksheets.
There are also A+Vs on how to design and solve a case Excel worksheet from scratch.
And A+Vs on showcasing the Excel results by designing a PowerPoint presentation.
2. PRE‐LEG 2012 COURSE CONTENT: THE 11 LMs
6. ONLINE RESOURCES FOR TRADITIONAL CLASS
i. Percentages and Weighted Average
ii. Balance Sheet and Income Statement
iii. Channel Markups and Markdowns
iv. Contribution Analysis and Breakeven Point
v. Designing a case Excel worksheet from scratch
vi. Creating a PowerPoint from a completed Excel file
vii. Product and (viii) Promotion
ix. Price and (x) Place or Distribution
xi. Net Present Value.
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Students in the face to face format are enrolled in their own Blackboard Learn site
And allowed access to the online materials via that site. However, resources are activated only AFTER the topics are covered in the classroom. Therefore, the online resources are designed to be a virtual “tutor” in the face to face class.
This feature maybe unique to MKTG 3700.
9. COMPLETING LEG 2012 OBJECTIVE # i
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13. COMPLETING LEG 2012 OBJECTIVE # ii
Illustration of multi‐product breakeven: mini case and its •
blank Excel worksheet.
The Virginia Company, Inc.
Spring 2013 C
alculation of firs
t year sales (s
alesforecas
t) of a new product from tes
t market results
Problem adapted from Strategic M
arketing Problems 6/e, Kerin and Peterson, Prentice-Hall
Spreadsheet designed by D
r. Ganesh
Adapted, with thanks, by Dr. Gopala Ganesh froma problem provided by Acorn
Professional Tutors (UK) www.acornlive.com;[email protected]
MEASURING ABSOLUTE MARKET POTENTIAL: TEST MARKET DATA
The Virginia Company based in Jamestown, Virginia produces and markets
three products. Price, cost and unit sales last year are given below. Annual
fixed costs are estimated to be $800,000.
package size in ounces, size 1
package size in ounces, size 2
Unit Selling Price of Product A
Unit Selling Price of Product B
Unit Selling Price of Product C
?
?
?
Unit Variable Cost of Product A
Unit Variable Cost of Product B
Unit Variable Cost of Product C
?
?
?
Last Year Unit Sales of Product A
Last Year Unit Sales of Product B
Last Year Unit Sales of Product C
?
?
?
Fixed cost
Profit Goal
?
?
This problem is an adaptation, with permission, based on extraction of key data from the O’Gradys
Potato Chips case on p219 of Strategic Marketing Problems 6/e by Kerin and Peterson,
Allyn and Bacon, 1987 (now a part of Pearson).
Product A
Product B
Product C
Variable Cost
per unit
$20.00
$30.00
$10.00
$ Contribution of Product A
$ Contribution of Product B
$ Contribution of Product C
Last Year
Unit Sales
6.000
9,000
15,000
1. VCI’s break-even point in units and dollar sales for the year ahead,
assuming last year’s sales breakup as “typical.”
2. Breakup the # and $ breakeven point by each of the 3 items.
3. How does this break-even point change, if VCI would like to earn a
profit of $500,000 Again, calculate #, $ and breakup of these for each
of the 3 items
$
$
$
$
0.07
0.12
required sales v
olum
e for a "G
O" decision
$
50,000,000.00
To be sold in two sizes: 8oz (sells for $1.06) and 12 oz (sells for $1.40.)
$ contribution of existing brand per pound
% sales of new brand cannibalized from existing brand
N
um
ber of ounces in a pound
Assume that U
SA follow
sM
idland! Hence,
# of times that a trial purchase occurs
# of times a repeat purchase occurs
# tim
es additional repeats occur, PER YEAR
H
ence, total number of purchases in first year
Test ran for 6 months in the Midland, TX MSA of about 500,000 households.
Last Year % Unit Sales of Product A
Last Year % Unit Sales of Product B
Last Year % Unit Sales of Product C
c
c
c
Therefore, Therefore, weighted VCI selling price
and, weighted VCI variable cost
and, weighted VCI $ contribution
c
c
c
Annual fixed cost
VCI's #BEP
VCI's $BEP
c
c
c
VCI's #BEP of Product A
VCI's #BEP of Product B
VCI's #BEP of Product C
c
c
c
VCI's $BEP of Product A
VCI's $BEP of Product B
VCI's $BEP of Product C
c
c
c
The remaining 80% were new sales.
c
The existing brand has a profit margin of 18 cents per pound.
C
annibalization analysis
VCI's Fixed Cost plus Profit Objective
VCI's #RLS
VCI's $RLS
c
c
There are 80 million households in the USA.
VCI's #RLS of Product A
VCI's #RLS of Product B
VCI's #RLS of Product C
c
c
c
Estimate first year USA market potential and the impact on the company’s net contribution if the sales are
realized and all costs are assumed to be very realistic estimates.
VCI's $RLS of Product A
VCI's $RLS of Product B
VCI's $RLS of Product C
c
c
c
Test market data obtained from a household panel data (syndicated source).
N
ew brand $ sales rev
enue per ounce, size 1
…
and $ sales rev
enue per PO
UN
D
, size 1
N
ew brand $ sales rev
enue per ounce, size 2
…
and $ sales rev
enue per PO
UN
D
, size 2
The repeaters bought about 1.75 additional times during the six months, about 3 times for the year.
86% of the purchases were 8oz. Remaining 14% were 12 oz
About 20% of sales were cannibalized from the company’s existing brand.
0.13
2.12
0.12
1.87
$
2.08
$
$
$
$
H
ence, new brand's weighted av
erage $ contribution per pound
$
0.14
T
herefore, first year total pound v
olum
e
..and first year total $ sales v
olum
e
$
36,722,400
76,549,066.88
Inputs Section
$ 60.00
$ 80.00
$ 40.00
$ 20.00
$ 30.00
$ 10.00
Last Year Unit Sales of Product A
Last Year Unit Sales of Product B
Last Year Unit Sales of Product C
6,000
9,000
15,000
Fixed cost
Profit G
oal
$ 8
00,000.00
$ 500,000.00
U
nit Selling Price of Product A
U
nit Selling Price of Product B
U
nit Selling Price of Product C
6
0
8
0
4
0
U
nit Variable Cost of Product A
U
nit Variable Cost of Product B
U
nit Variable Cost of Product C
2
0
3
0
1
0
Last Y
ear U
nit Sales of Product A
Last Y
ear U
nit Sales of Product B
Last Y
ear U
nit Sales of Product C
6
0
0
0
9
0
0
0
1
5
0
0
0
Fixed cost
Profit G
oal
8
0
0
0
0
0
5
0
0
0
0
0
•
O
utp
uts Sectio
n:
O
utputs Section:
$ Contribution of Product A
$ Contribution of Product B
$ Contribution of Product C
$
Contribution of Product A
$
Contribution of Product B
$
Contribution of Product C
$ 40.00
$ 50.00
$ 30.00
Last Year % Unit Sales of Product A
Last Year % Unit Sales of Product B
Last Year % Unit Sales of Product C
20.00%
30.00%
50.00%
Therefore, Therefore, weighted VCI selling price
and, weighted VCI variable cost
and, weighted VCI $ contribution
$ 56.00
$ 18.00
$ 38.00
Annual fixed cost
VCI's #BEP
VCI's $BEP
$ 8
00,000.00
21,053
$ 1,178,968.00
VCI's #BEP of Product A
VCI's #BEP of Product B
VCI's #BEP of Product C
4,211
6,316
10,527
VCI's $BEP of Product A
VCI's $BEP of Product B
VCI's $BEP of Product C
$ 1,300,000.00
34,211
$ 1,915,816.00
VCI's #RLS of Product A
VCI's #RLS of Product B
VCI's #RLS of Product C
6,843
10,264
17,106
VCI's $RLS of Product A
VCI's $RLS of Product B
VCI's $RLS of Product C
$ 410,580.00
$ 821,120.00
$ 6
84,240.00
=
G
1
7
/SU
M
($
G
$
1
7
:$
G
$
1
9
)
=
G
1
8
/SU
M
($
G
$
1
7
:$
G
$
1
9
)
=
G
1
9
/SU
M
($
G
$
1
7
:$
G
$
1
9
)
T
herefore, T
herefore, w
eighted VC
I selling price
and, w
eighted VC
I varia
ble cost
and, w
eighted VC
I $
contribution
=
G
9
*
G
3
0
+
G
1
0
*
G
3
1
+
G
1
1
*
G
3
2
=
G
1
3
*
G
3
0
+
G
1
4
*
G
3
1
+
G
1
5
*
G
3
2
=
G
2
6
*
G
3
0
+
G
2
7
*
G
3
1
+
G
2
8
*
G
3
2
Annual fixed cost
VC
I's #
B
E
P
VC
I's $
B
E
P
=
G
2
1
=
RO
U
N
D
U
P(G
3
9
/G
3
7
,0
)
=
G
4
0
*
G
3
5
VC
I's #
B
E
P of Product A
VC
I's #
B
E
P of Product B
VC
I's #
B
E
P of Product C
$ 252,660.00
$ 505,280.00
$ 4
21,080.00
VCI's Fixed Cost plus Profit Objective
VCI's #RLS
VCI's $RLS
=
G
9
‐G
1
3
=
G
1
0
‐G
1
4
=
G
1
1
‐G
1
5
Last Y
ear %
U
nit Sales of Product A
U
nit Sales of Product B
Last Y
ear %
Last Y
ear %
U
nit Sales of Product C
(0.04)
0.14
$
$
(273,214.66)
4,195,166.98
T
hus, net $ contribution to the com
pany
$
3,921,952.32
=
G
2
2
+
G
3
9
=
RO
U
N
D
U
P(G
5
1
/G
3
7
,0
)
=
G
5
3
*
G
3
5
VC
I's #
R
LS of Product A
VC
I's #
R
LS of Product B
VC
I's #
R
LS of Product C
=
RO
U
N
D
U
P($
G
$
5
3
*
G
3
0
,0
)
=
RO
U
N
D
U
P($
G
$
5
3
*
G
3
1
,0
)
=
RO
U
N
D
U
P($
G
$
5
3
*
G
3
2
,0
)
VC
I's $
R
LS of Product A
VC
I's $
R
LS of Product B
VC
I's $
R
LS of Product C
=
G
5
6
*
G
9
=
G
5
7
*
G
1
0
=
G
5
8
*
G
1
1
LM # 12 ends with a time series forecasting case.
A+Vs show how to adjust the data for seasonality.
And then forecast using Naive, Moving Average, Exponential Smoothing and Simple Regression.
Since time series data are plentiful, the intent is keep augmenting this FL Tourism case with new problems.
Florida Tourism Data The state of Florida depends heavily on tourism as a source of tax revenue, and a number of industries in Florida (such as hotels, amusement areas, and rental cars) are heavily dependent on the flow of tourists from other states and countries. Florida Tourism Research Associates (FTRA) performs market studies for a variety of tourism‐related businesses and government agencies. Early in 2012, FTRA gathered historical quarterly data on tourist arrivals (‘000s) in the state. An extract covering the four year period 2008 through 2011 is shown below. Please adjust this data for seasonality. Then examine how well naïve, seasonally adjusted naïve, 2 and 3 period moving average, exponential smoothing and straight line forecasting methods work with this data, using Mean Absolute Percent Error or MAPE as the basis of the comparison. =
G
4
3
*
G
9
=
G
4
4
*
G
1
0
=
G
4
5
*
G
1
1
VC
I's Fixed C
ost plus Profit O
bjective
7,344,480
29,377,920
$
$
H
ence, total $ c gained/lost from cannibalized v
olum
e
…
and total $ c gained/lost from non-cannibalized volume
=
RO
U
N
D
U
P($
G
$
4
0
*
G
3
0
,0
)
=
RO
U
N
D
U
P($
G
$
4
0
*
G
3
1
,0
)
=
RO
U
N
D
U
P($
G
$
4
0
*
G
3
2
,0
)
VC
I's $
B
E
P of Product A
VC
I's $
B
E
P of Product B
VC
I's $
B
E
P of Product C
VC
I's #
R
LS
VC
I's $
R
LS
0.01
0.14
0.01
0.16
net $ c gained or lost per pound of NEW brand, w
hen cannibalized
net $ c gained or lost per pound of NEW brand, w
hen NO
T cannibalized
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•
A
d
a
p
ted
, w
ith th
an
k
s, b
y D
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. G
o
p
ala G
an
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oma
p
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ob
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v
id
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co
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liv
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In
pu
ts Section
Unit Selling Price of Product A
Unit Selling Price of Product B
Unit Selling Price of Product C
8.56
0.54
$
$
$
$
H
ence, new brand's weighted av
erage $ sales per pound
N
ew brand $ contribution per ounce, size 1
…
and $ contribution per PO
U
ND
, size 1
N
ew brand $ contribution per ounce, size 2
…
and $ contribution per PO
U
ND
, size 2
first year pound volume, cannibalized
first year pound volume, non-cannibalized
Spring 2
0
1
3
T
h
e V
irgin
ia
C
om
p
a
n
y Inc.
Illustra
tio
n o
f M
ulti‐p
ro
d
uct B
rea
keven
Po
in
t
w
orksheet created by D
r. G
opala G
anesh
0.18
20.00%
16
26,400,000
10,560,000
31,680,000
68,640,000
w
eighted average size of a typical purchase in ounces
…
and, w
eighted av
erage size of a typical purchase in PO
U
ND
S
33% households had TRIED the product at least once. Of these, 40% repeated at least once.
• Multi‐product breakeven: solution and formula.
Unit Variable Cost of Product A
Unit Variable Cost of Product B
Unit Variable Cost of Product C
86.00%
14.00%
$
Output Section
Guidelines require a minimum sales volume of $50 million in first year, for a “go” decision.
14. COMPLETING LEG 2012 OBJECTIVE # ii
Adapted, with thank
s, by D
r. G
opala G
anesh froma problemprovided by Acorn
Professional Tutors (U
K) www.acornliv
e.com
;tufal@
acornlive.com
1.06
1.40
80,000,000
500,000
33.00%
40.00%
3
% sales of size 1, during test market
% sales of size 2, during test market
Based on cost data provided by the company, the profit margins (contributions) are about 7c for the 8oz
package, and 12c for the 12 oz package.
c
c
c
10. COMPLETING LEG 2012 OBJECTIVE # i
Spring 2013 The Virginia Com
pany Inc.
Illustration of M
ulti‐product Breakeven Point
worksheet created by D
r. Gopala G
anesh
8
12
selling price per package, size 1
selling price per package, size 2
$contribution per package, size 1
$contribution per package, size 2
T
otal num
ber of households in U
SA
T
otal num
ber of households in M
idland, Texas
% that tried the product
% of triers that repeated
# of additional purchases during test m
arket by repeaters
New brand of salty snack, yet to be introduced.
Outputs Section:
Selling Price
per unit
$60.00
$80.00
$40.00
Input Section
Inputs Section
Adapted, with thanks, by Dr. Gopala Ganesh from a problem provided by
Acorn Professional Tutors (UK) www.acornlive.com;[email protected]
Item
LM # 12 also includes other mini cases, such as this, all with Excel resources, and some with A+V.
Spring 2013 The Virginia Company Inc.
Illustration of Multi‐product Breakeven Point
worksheet created by Dr. Gopala Ganesh
Year 2008 2009 Quarter 1 2 3 4 1 2 3 4 Number 4251 2833 2425 2776 4846 2932 2557 2881 Year 2010 2011 Quarter 1 2 3 4 1 2 3 4 Number 4562 3200 2715 3010 4877 3280 2854 3305 3. HOW THE CLASS IS TAUGHT
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The main M&M teaching vehicle is a mini‐case. i.
Accompanied by a blank, professor’s Excel worksheet. ii.
In a semester, cover about 50 cases in the 11 LMs. In the face to face class, various Marketing Math concepts are discussed using these cases. The cases are solved in class by hand and/or Excel. Students are encouraged to participate by responding to a series of professor questions/prompts. And learn to analyze the cases step‐by‐step.
Later on, similar cases are assigned for grade to be solved using the professor’s Excel worksheets.
Students also design the Excel worksheet for one or two “Comprehensive Case” themselves and solve.
And then a PowerPoint presentation for that CC case.
4. TEACHING THE ONLINE FORMAT
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7. LEG 2012 OBJECTIVES
Add about 10 new cases, several in the area of multiple‐
product breakeven point
Add a new 73‐slide Learning Module on Market Measurement and Forecasting. •
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•
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•
15. NATIONAL RECOGNITION OF APPROACH
For LEG 2012 objective # 2, a new, online only, self‐taught MKTG 3700 has won national‐level recognition.
Learning Module was put together.
In this LM # 12, as with the others, the anchor was an enhanced PDF PowerPoint presentation.
Within that topics were organized with hyperlinked PDFs, Excel worksheets and A+Vs as in other modules.
Covered in Module 12: page 1
Slide
Topic
Slide
Covered in Module 12: page 2
Slide
Topic
Topic
Slide
Topic
09
Why Market Measurement
48
RMP: Multiple Corollary Factors: BPI
61
Forecasting Basics
69
TSF: Straight Line Projection
10
Basic Types of Market Measurement
52
RMP: Application of the BPI
62
Types of Sales Forecasting
70
Descriptive Models Forecasting
RMP: Customizing the BPI
63
Measuring the Future: Forecasting
71
Interpreting the forecasts
Adjusting for Seasonality
72
Other issues in forecasting
73
A comprehensive example
12
Measuring Absolute Market Potential
54
24
AMP: Replacement Demand
55
Special RMP Indexes
65
40
AMP from Test Market Data
56
Constructing the CDI and BDI
66
TSF: Simple Trend Extrapolation
41
Measuring Relative Market Potential
60
Internal Databases
67
TSF: Moving Average
42
RMP: Single Corollary Factor
68
TSF: Exponential Smoothing
Go to Index Page 2
Go to Index Page 1
1
8. COMPLETING LEG 2012 OBJECTIVE # i
•
Students in the asynchronous online format are completely dependent upon UNT Blackboard Learn. On the website, each Learning Module is anchored by an •
enhanced PDF PowerPoint presentation. Mini case PDFs, their blank Excel worksheets and PDFs of •
solutions are hyperlinked within each module.
•
11. COMPLETING LEG 2012 OBJECTIVE # ii
8
16. WANT EVEN MORE DETAILED INFORMATION?
12. COMPLETING LEG 2012 OBJECTIVE # ii
Several new multi‐product breakeven cases were first •
located and author/publisher permissions secured.
•
Afterward each case was re‐written to fit the standard one page format.
Its blank Excel worksheet then prepared, solved, printed •
to PDF and both linked in the lesson module PDF.
The corresponding formula worksheet PDF was also prepared and linked in the lesson module PDF.
But the formula hyperlink was subsequently deactivated by deleting the file. Thus giving students access to the A+V and the solution PDF, but not the formula PDF. In graded assignments, their challenge is to exactly match the professor’s solution by writing their own formulas.
LM # 12 includes 14 forecasting problems, such as this one on Absolute Market Potential or AMP.
Solved step‐by‐step, in a sequence of slides, with some A+Vs as well, for help where deemed necessary.
From the problem (left) to its solution (right).
AMP: Replacement Demand
AMP: Replacement Demand
•
Another example: The Tennis
Racquet Manufacturers Association
has estimated that in a certain
geographical region in the USA,
about 15% of racquets still in use
are scrapped the first year after
purchase, 25% after two years, 50%
after three years and almost all
after four years. Industry sales in
thousands in that USA region are
given below. Based on the following
sales and scrappage rate, what do
you estimate to be the replacement
market potential in this geographic
region of the USA for 2012?
Year
2011
Sales
6479
2009
4890
2008
4798
2007
Year of TR
original
purchase
5250
2010
Here is the completed worksheet for 2012 replacement demand
table for Tennis Racquets. Did you match my answers?
Industry Unit
Sales ‘000s,
given
%
surviving
into 2012
# at the
start of
2012
2011
5,250
85
4,463
15
2010
6,479
64
4,147
% units to
be scrapped
in 2012
25
2009
4,879
32
1,561
50
2008
4,798
0
0
100
Total Replacement Demand for 2012
4678
32
Replaced
in 2012
669
1,037
MKTG 3700 Marketing and Money is fully described here: Ganesh, Gopala, Sun, Qin and Somjit Barat (2010), “Improving the Marketing Math Skills of Marketing Undergraduate Students through a Unique Undergraduate Marketing Math Course”, Marketing Education Review.
An expanded presentation of this poster is located at: http://faculty.coba.unt.edu/ganesh/
Scroll down to UFTLA2013.
The UserName is uftla2013 and pw is goodluck
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Please feel free to contact me:
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