Part A – BBQfun Sales Data Worksheet

BBQfun sales data worksheet

Performance
Market share (projected*):
Assume market share constant across all products.

Financial year Local The Yard BBQs R us Outdoorz BBQfun

(FY) independents
FY 2013–14 30% 0% 25% 23% 22%

FY 2014–15 30% 0% 27% 23% 20%

FY 2015–13 30% 0% 22% 25% 23%

*
FY 2016–17 30% 0% 22% 24% 24%

Sales performance:

Financial year (FY) Total sales

FY 2013–14 8,500,000

FY 2014–15 10,000,000

FY 2015–13 9,000,000

FY 2015–16 9,500,000

Estimated total market potential for FY 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 FY 2012–13.

Financial year (FY) BBQs Outdoor BBQ Total

Furniture Accessories
FY 2012–13
25,000 13,000 42,000 80,000
FY 2013–14
35,000 15,000 58,000 108,000
FY 2014–15
40,000 17,000 68,000 125,000
FY 2015–13
45,000 19,000 75,000 139,000
FY 2016–17 52,500 21,000 88,000 161,500
Own Branded Products
Assume market share of 24% for BBQfun to calculate projected number of units to sell for each item in
FY 2012–13.

BBQs Outdoor Furniture BBQ Accessories

30,000 13,000 56,000
Number of buyers
1 1 3
Quantity
$600 $850 $50
Average price

Bargain Market
Assume market share of 25% for BBQfun.

BBQs Outdoor Furniture BBQ Accessories

40,000 20,000 70,000
Number of buyers
1 1 3
Quantity
$500 $650 $40
Average price

With E-commerce
Assume market share of 24% for BBQfun.

BBQs Outdoor Furniture BBQ Accessories

12,600 5,040 21,120
Number of buyers
1 1 3
Quantity
$620 $880 $55
Average price

Opportunities and Profit Figures for Calculation

 Own brand E-commerce Bargain market
BBQ: 7,200 BBQ: 12,600 BBQ: 10,000
Sales volume (units)
Furniture: 3,120 Furniture: 5,040 Furniture: 5,000
Accessories: 40,320 Accessories: 63,360 Accessories: 52,500
BBQ: $600 BBQ: $620 BBQ: $500
Price
Furniture:$850 Furniture: $880 Furniture: $650
Accessories:$50 Accessories:$55 Accessories:$40
BBQ: $500 BBQ: $300 BBQ: $200
Unit contribution margin
Furniture: $600 Furniture: $420 Furniture: $220
Accessories: $40 Accessories: $20 Accessories: $10
8,988,000 15,732,000 10,350,000
Total revenue
7,084,800 7,164,000 3,625,000
Total gross profit
FY 2016–17
Add lease: Add training: See approved budget
Additional fixed costs
$1,000,000 $50,000 (no change in fixed
Add labour: Add online store costs)
$500,000 development:
Add plant $100,000
(depreciation): Add new plant and
$500,000 equipment
(depreciation):
$150,000
Add labour: $250,000
Add reconfiguring of
warehouse/
office: $50,000
200,086 1,679,286 (1,259,714)
Total net profit
FY 2016–17

Profitability Index Figure for Calculations

Own brand E-commerce Bargain market

Cash flow 2016–17 (Use gross profit) (Use gross profit) (Use gross profit)
Opportunity cost 8% 8% 8%
Present value of future 6,560,000 6,633,333 3,356,481
cash flows
Present value of initial (Use total fixed (Use total fixed (Use total fixed costs)
investment costs) costs)
Profitability index 0.95 1.2 0.69

Available Resource and Costs

 Resources Costs
Additional staff $25,000 year average Additional staff costs: 250,000

4 – additional warehouse workers

6 – additional drivers
(10 x 25,000)
Plant and equipment Plant and equipment costs: 150,000
● Delivery trucks
depreciation
($20,000 each)
6 – delivery trucks x 20,000
● Forklifts ($10,000 each) 3 – forklifts x 10,000

Promotional costs $500,000

Website developers Contractors ($2,000/day) Website development cost: 100,000
(2,000 x 50)

Staff training Online customer service training Staff training cost: 24,000
($3,000 per staff member) (3,000 x 8)

Management change $3,000 each Management and leadership training

leadership training for cost: 24,000
store managers and team (3,000 x 9)
leaders
Warehouse and office Reconfiguration cost: 50,000
reconfiguration
Total 1,101,000

Part B – Report to the Board of Directors

 EXECUTIVE SUMMARY

The three marketing opportunities namely, manufacturing and selling own brand,
selling through e-commerce, and selling product at a bargain price where
analysed and studied to find out which is the best among the three that would fit
for BBQfun. The operation changes to maintain the quality, the costs to be
incurred, as well as the regulation and relevant legislations where also being
discussed in this report.

Introduction
Managing a business is not easy. It requires time, effort, and creative ideas. The
success of a business depends on the strategies and plans you make. Both serves a
guide for the actions and decisions that you will make in the future. That is why
having a goal and mission is important so that you will be able to identify the
target that you will aim. But of course, there is no perfect organization. There are
things that could happen beyond someone else’s dominion but you and your
people’s ability to analyse and decide would help you to surpass any difficulties.
BBQfun had identified three marketing opportunities to evaluate. The first
opportunity is to manufacture and sell own brand. The second one is to sell the
products online to reach more potential buyers. And the third one is to sell the
product at a lower price aiming for more customers to buy the product.
All of these opportunities where carefully analysed from its financial impact up to
the things and changes that need to be invested and implemented to find out
which among the opportunities fits for the organization that would lead to a
success and generate high revenue
Evaluation to the Three Marketing Opportunities

Financial year (FY) BBQs Outdoor BBQ Total

Furniture Accessories
FY 2012–13 25,000 13,000 42,000 80,000
FY 2013–14 35,000 15,000 58,000 108,000
FY 2014–15 40,000 17,000 68,000 125,000
FY 2015–13 45,000 19,000 75,000 139,000
FY 2016–17 52,500 21,000 88,000 161,500

Figure 1

Based on this table, by 2016-2017 the total market share would reach up to 161,500.
This goes to show that a greater volume of orders is can be expected and that will result to a
high amount of sales. Therefore, the company could get a competitive price from the supplier
and an increase in the buying power.

Marketing Opportunities Net Profit Present Value of Profitabilit

Future Cash y Index
Flows
200,086 6,560,000 0.95
 Manufacturing and Selling Own
Brand
1,679,286 6,633,333 1.2
 Selling through E-commerce
1,259,714 3,356,481 0.69
 Selling product at a Bargain Price
Figure 2
It can be clearly seen on the summary figure above that among the three marketing
opportunities, selling through e-commerce is the best choice followed by manufacturing and
selling own brand and selling product at a bargain price.
E-commerce would allow the BBQfun to reach more customers across Australia that
would result to a high net income. Aside from this, fixed cost is lesser compared to the other
two marketing opportunities. Also, the profitability index of 1.2 is would encourage investors.

External factors that may be relevant to each opportunity.

 Anti-discrimination act of 1991

-this act is suitable for the three marketing approaches. It will protect the employees,
staff, and customers against discrimination and that everybody should be treated equally
whatever their sex, religion, belief, and race is.
 Spam Act 2003
-this act prohibits the imitation of product
 Australian Direct Marketing Association Code of Practice
Return On Investment (ROI)
Own Brand
Net Profit 200,086
÷
Cost of Investment 6,884,714 2.91%

E-Commerce
Net Profit 1,679,286
÷
Cost of Investment 5,484,714 30.61%
Bargain Market
Net Profit (1,259,714)
÷
Cost of Investment 4,884,714 (25.79%)

Profitability Index
PV of Future Cash Flows:
Own Brand: 7,084,000 / 108% / 6,884,714 = 0.95
E-Commerce: 7,164,000 / 108% / 5,484,714 = 1.20
Bargain Market 3,625,000 / 108% / 4,884,714 = 0.69

Based on the computation above, selling products through E-Commerce had the
highest Return on Investment and Profitability Index.
Return on investment indicates the percentage of money that can be realized or
potential return to your investment based on the net income. While profitability index is
usually used by the investors to help them decide whether to accept or reject the investment.
With the use of e-commerce, we could possibly generate high revenue while bargain market is
the least among the marketing opportunities.
Costs for Change Operations to Maintain Quality

 There must be a training for the staffs for the online store on how they would assist and
respond the queries of customers online.
 Staffs must also be trained on how to answer phone calls.
 Additional staffs for advertisements will also be needed.
 BBQfun needs website developers in order to create an online store or website that is
safe and customer friendly for fast transactions
 Since BBQfun will be using of e-commerce, new equipment will be needed like
computers and internet connectivity.
 Funds for 3 new forklifts is also needed as well as operators for these.

Resources Costs
Additional staff $25,000 year average Additional staff costs: 250,000

4 – additional warehouse workers

6 – additional drivers
(10 x 25,000)
Plant and equipment Plant and equipment costs: 150,000
● Delivery trucks
depreciation
($20,000 each)
6 – delivery trucks x 20,000
● Forklifts ($10,000 each) 3 – forklifts x 10,000

Promotional costs $500,000

Website developers Contractors ($2,000/day) Website development cost: 100,000
(2,000 x 50)

Staff training Online customer service training Staff training cost: 24,000
($3,000 per staff member) (3,000 x 8)

Management change $3,000 each Management and leadership training

leadership training for cost: 24,000
store managers and team (3,000 x 9)
leaders
Warehouse and office Reconfiguration cost: 50,000
reconfiguration
Total 1,101,000
Figure 3
This shows the costs that will be incurred by using e-commerce as a platform to sell
products

Conclusion:
After using the information in BBQfun Worksheet and evaluating each
opportunity, we found out that Selling products through E-Commerce is the top-
ranked among the three opportunities as fixed cost is lesser and net income is
higher therefore generating a high return in invest of 30.61% and profitability
index of 1.20.