Recent Question/Assignment

Evaluate marketing opportunities
Submission details
Candidate’s Name Phone No.
Assessor’s Name Phone No.
Assessment Site
Assessment Date/s Time/s
The assessment task is due on the date specified by your assessor. Any variations to this arrangement must be approved in writing by your assessor.
Submit this document with any required evidence attached. See specifications below for details.
Performance objective
The candidate will demonstrate skills and knowledge required to investigate marketing opportunities and evaluate required changes to current operations.
Assessment description
In response to a simulated business scenario, you will evaluate three marketing opportunities that have been identified for you, rank them in terms of viability and likely contribution to the business, and assess the impact of the top-ranked opportunity on operations. You will then prepare a report for the board of directors documenting identified marketing opportunities and required changes.
There are two parts to this assessment task. Both parts relate to three new opportunities that need to be evaluated. Part A requires you to read all materials and to evaluate and complete the information in the BBQfun sales data worksheet. In part B you will prepare a report for a board of directors to outline, evaluate and rank the opportunities.
Part A
1. Read all materials required for this activity: this procedure, BBQfun simulated business, information supplied in the scenario, and information supplied in the BBQfun sales data worksheet of this assessment task.
You are the marketing manager at BBQfun. You and your team have identified three marketing opportunities to evaluate. They are:
? manufacture and sell own brand
? sell products through e-commerce
? sell products at bargain prices
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 would be too expensive.
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.
The third option is to aim to increase market share by cutting the cost of products and aiming at mass appeal.
Further information is provided in the BBQfun sales data worksheet.
Each opportunity will be promoted through a $500,000 television, internet and email advertising campaign (cost accounted for in approved budget).
You will need to review the BBQfun simulated business information to determine organisational fit, profitability and operational implications for each of the three opportunities.
On the basis of the profitability index (opportunity cost estimated to be 8%) and a full appreciation of other, non-financial factors, you will need to rank these opportunities and choose one top-rated opportunity for further evaluation.
After ranking the three opportunities, you will complete your evaluation in terms of impact on operations. Information is provided in the BBQfun sales data worksheet.
You will then need to provide a report to the board of directors documenting your evaluation of identified marketing opportunities and required changes to operations.
2. Using all the information you have been provided with, fill in the blank spaces (shaded boxes) in the BBQfun sales data worksheet in the following order:
a. Forecast the total market potential for 2012/13.
b. Use the market share for each opportunity and the total market potential to forecast the number of buyers in each category for the e-commerce market opportunity.
c. Use the number of buyers from market potential tables to calculate the unit sales volumes for the e-commerce and bargain market opportunities.
d. From this information, calculate estimated total revenue and gross profit.
e. Use the additional fixed costs and the BBQfun simulated budget to determine the net profit for each opportunity.
f. Use gross profit and total fixed costs from each opportunity to calculate the profitability index for each opportunity.
g. Use information from this assessment task and the BBQfun simulated business to calculate total cost of operational changes.
Part B
1. Referring to BBQfun simulated business documentation, summarise major costs, benefits and risks associated with each opportunity, including risks associated with potential competitors. Identify at least two strategies or approaches to mitigate risk.
2. Ensure you can justify changes on the basis of maintaining quality.
3. Using information from the BBQfun sales data worksheet, estimate and justify resource requirements and costs for changed operations. Consider:
a. additional staff
b. distribution costs
c. equipment
d. promotional costs
e. staff training.
4. Appropriate language and level of formality to satisfy needs of your readers:
a. formal language
b. technical vocabulary; no need to define terms such as ‘marketing mix’, for example
c. assume knowledge of organisational policies, marketing strategies.
5. Submit your report as per specifications below. Keep a copy of your report for your records.
You must submit:
? evaluation report for the board of directors that covers all of the listed requirements.
Your assessor will be looking for:
? literacy skills to identify and interpret market information, to write in a formal style appropriate to a professional audience and to document outcomes and requirements
? numeracy skills to calculate and evaluate financial information on new marketing options
? knowledge of key provisions of relevant legislation from all forms of government, codes of practice and national standards that may affect aspects of business operations such as:
? anti discrimination legislation and the principles of equal opportunity, equity and diversity
? ethical principles
? marketing codes of practice and conduct such as the Australian Direct Marketing Association (ADMA) Direct Marketing Code of Practice, The Free TV Australia Commercial Television Industry Code of Practice, and the Australian E commerce Best Practice Model
? privacy laws
? Competition and Consumer Act
? knowledge of organisational marketing plan, structure, products and services
? knowledge of principles of marketing and the marketing mix
? knowledge of statistical methods and techniques to evaluate marketing opportunities, including forecasting techniques.

BBQfun sales data worksheet
Market share (Projected*):
Assume market share constant across all products.
Financial year (FY) Local independents The Yard BBQ’s R us Outdoorz BBQfun
FY2009/10 30% 0% 25% 23% 22%
FY 2010/11 30% 0% 27% 23% 20%
FY2011 /12 30% 0% 22% 25% 23%
*FY2012 /13 30% 0% 22% 24% 24%
Sales performance:
Financial year (FY) Total sales
FY2008/09 8,500,000
FY2009/10 10,000,000
FY2010/11 9,000,000
FY2011/12 9,500,000
Estimated total market potential for 2012/13 (SE Qld)
Calculate potential sales for marketing opportunities.
Total market potential (with potential online sales included)
Use to calculate potential sales with e-commerce included in FY2012/13.
Financial year (FY) BBQs Outdoor Furniture BBQ Accessories Total
FY2008/9 25,000 13,000 42,000 80,000
FY2009/10 35,000 15,000 58,000 108,000
FY2010/11 40,000 17,000 68,000 125,000
FY2011/12 45,000 19,000 75,000 139,000
Own Branded products
Assume market share of 24% for BBQfun to calculate projected number of units to sell for each item in 2012/13.
BBQs Outdoor Furniture BBQ Accessories
Number of buyers 30,000 13,000 56,000
Quantity 1 1 3
Average price $600 $850 $50
Bargain market
Assume market share of 25% for BBQfun.
BBQs Outdoor Furniture BBQ Accessories
Number of buyers 40,000 20,000 70,000
Quantity 1 1 3
Average price $500 $650 $40
With E-commerce
Assume market share of 24% for BBQfun.
BBQs Outdoor Furniture BBQ Accessories
Number of buyers
Quantity 1 1 3
Average price $620 $880 $55
Opportunities and profit figures for calculation
Own brand E-commerce Bargain market
Sales volume (units) BBQ: 7200 BBQ: BBQ:
Furniture: 3120 Furniture: Furniture:
Accessories: 40,320 Accessories: Accessories:
Price BBQ: $600 BBQ: $620 BBQ: $500
Furniture:$850 Furniture: $880 Furniture: $650
Accessories:$50 Accessories:$55 Accessories:$40
Unit contribution margin BBQ: $500 BBQ: $300 BBQ: $200
Furniture: $600 Furniture: $420 Furniture: $220
Accessories: $40 Accessories: $20 Accessories: $10
Total revenue
Total gross profit 2012/13
Additional fixed costs Add lease: $1,000,000
Add labour: $500,000
Add plant (depreciation): $500,000 Add training: $50,000
Add online store development:
Add new plant and equipment (depreciation): $150,000
Add labour: $250,000
Add reconfiguring of warehouse/office: $50,000 See approved budget (no change in fixed costs)
Total net profit 2012/13
Profitability index figures for calculation
Own brand E-commerce Bargain market
Cash flow 2012/13 (Use gross profit) (Use gross profit) (Use gross profit)
Opportunity cost 8% 8% 8%
Present value of future cash flows
Present value of initial investment (Use total fixed costs) (Use total fixed costs) (Use total fixed costs)
Profitability index
Operational changes
After consulting with the management team at BBQfun, you determine:
? high risk of customer service quality problems for online customers
? high risk of staff misunderstanding changes and considering online sales as threat to jobs
? eight online sales and customer service people will be needed to manage increased online customers
? since stores are overstaffed, need for online people could be met from drawing from existing employees at the two stores
? currently no staff have online customer service skills
? management would like to develop people through retraining rather than hire new staff to handle online sales
? six delivery trucks needed to enable distribution
? website will take 50 days to develop
? three forklifts needed
? four additional warehouse workers needed
? six additional drivers needed
? office space may need to be reconfigured.
Available resources and costs
Resources Costs
Additional staff $25,000 year average Additional staff costs:
Plant and equipment depreciation ? Delivery trucks
($20,000 each)
? Forklifts ($10,000 each) Plant and equipment costs:
Promotional costs $500,000
Website developers Contractors ($2,000/day) Website development cost:
Staff training $ Online customer service training $3,000 per staff member Staff training cost:
Management change leadership training for store managers and team leaders $3,000 each Management and leadership training cost:
Warehouse and office reconfiguration Reconfiguration cost: