Part 2 of the six month strategy to develop the Members marketing prowess - This month "Setting Killer Objectives"

2. Let’s refresh ourselves of our
aims and goals of doing this work

3. Our Aim
By December 2015 we will have a tool kit that will provide the
basis of a marketing plan – a route map by which you can bring
your product / service directly to market.
Our Goal
For 2016 it is to lower the cost of getting
customers by 50% and
increase the rate of keeping them by 50%

4. Marketing Audit – Complete?
Why you really need to work on it
It’s a helicopter view
A starting point that questions “Are you
being effective?”
If you TRULY know the effect of what you
are doing now, only then can you judge if it
is a success or not
You can do more, less or something different

5. This Months BIG session
Any strategy starts by knowing where we are
now and where we want to be.
The numbers are our measures of the impacts
as we strive to achieve our goals
The aims
• Why this matters
• A case study; focus for this month is - one
way to use financial break-evens in your
marketing strategy
• A form to start to capture relevant data

7. The ‘Why’ in “why this matters”
• Strategy is your route map to the results your
business is aiming for
• Numbers should be used to help the decision
making process
• Price is the KEY number in the marketing mix
• Knowing what the effect of a change in price
has upon your break-even is a vital piece of
information

9. • Price is the most dynamic component of the
marketing mix – responsive and immediate
• Price needs to match organisational objectives
and goals – This could be
Market Share and competition
Operational capacity constraints
Cash-flow and profitability
• Question – Do you know where you price
point is?
Let’s Start to work on just one aspect of
the strategy
PRICE

10. Break-Even

11. A Case-study
Berkley-Laver Ltd have four different products
that range from the cheapest (Product 1) to the
most expensive (Product 4).Currently the
cheapest is the fastest selling whilst the most
expensive is the slowest to sell.
The business is working at full capacity. They are
looking to invest in leasing new equipment or
changing their mix.
Question: What happens to our break-even if
we shift the marketing effort to modify the mix
of sales.

12. The current position
These are the businesses
current fixed costs
£100,609 of costs
incurred
Fixed Costs
Directors salary £14,125
Subcontractor / staff costs £15,625
Total salary / wages £29,750
Sundry
Premises / council / waste £9,750
Utility bills Inc water £2,985
Business Insurances £1,065
Prperty / Equip maintenace £875
Waste / ruined stock / theft £2,785
Capital items - leasing costs £13,750
Travel / motor expenses £6,250
Total sundry £37,460
Marketing
- Website development / maintenance £4,750
-Social Media Account Mgmt £1,275
-Artwork £875
-Print £675
-Promotional items £1,675
-Events £650
-Advertising - Paper & magazine £975
-Networking £1,404
-PR £900
-Referral Program £650
Total Marketing £13,829
Telephone / broadband £780
Postage / stationery / office bits £216
Loan interest payments £10,956
Professional fees / book keeperAccountant £3,958
Credit card charges / bank charges £2,100
Contingency to cover bad debts £1,560
Total Fixed Costs £100,609

13. The existing sales position
This represents maximum
capacity
Existing sales Product 1 Product 2 Product 3 Product 4
Weighted
Average
Selling price £36.99 £49.99 £64.50 £99.00 £45.46
% of total sales by product 66% 18% 11% 5% 100%
Cost of delivery per item
Production costs - purchase / manufacturing £19.75 £22.95 £26.45 £32.05 £21.68
Packaging £0.80 £0.95 £1.15 £1.95 £0.92
Delivery £4.75 £4.75 £5.10 £6.10 £4.86
Total costs of sales £25.30 £28.65 £32.70 £40.10 £27.46
Contribution £11.69 £21.34 £31.80 £58.90 £18.00
% 32% 43% 49% 59% 40%
Fixed Costs £100,609
Revenues £66,402 £18,110 £11,067 £5,030
Total Units to B/E (Fixed cost / Contribution) 5,590 Units

14. Gradual shift in strategy
New Mix 1 Gradual change Product 1 Product 2 Product 3 Product 4
Weighted
Average
Selling price £36.99 £49.99 £64.50 £99.00 £48.03
% of total sales by product 45% 25% 17% 8% 95%
Original sales pattern 66% 18% 11% 5%
Shift -21% 7% 6% 3%
Cost of delivery per item
Production costs - purchase / manufacturing £19.75 £22.95 £26.45 £32.05 £21.69
Packaging £0.80 £0.95 £1.15 £1.95 £0.95
Delivery £4.75 £4.75 £5.10 £6.10 £4.68
Total costs of sales £25.30 £28.65 £32.70 £40.10 £27.31
Contribution £11.69 £21.34 £31.80 £58.90 £20.71
% 32% 43% 49% 59% 43%
Fixed Costs £100,609
Total Units to B/E (Fixed cost / Contribution) 4,857 Units
A 15% increase in average
contribution leads to a 13%
reduction in activity.
Machines working at 87%

15. Total Re-Brand
New Mix 2 - Major rebranding effort Product 1 Product 2 Product 3 Product 4
Weighted
Average
Selling price £36.99 £49.99 £64.50 £99.00 £76.20
% of total sales by product 11% 15% 25% 49% 100%
Original sales pattern 66% 18% 11% 5%
Shift -55% -3% 14% 44%
Cost of delivery per item
Production costs - purchase / manufacturing £19.75 £22.95 £26.45 £32.05 £27.93
Packaging £0.80 £0.95 £1.15 £1.95 £1.47
Delivery £4.75 £4.75 £5.10 £6.10 £5.50
Total costs of sales £25.30 £28.65 £32.70 £40.10 £34.90
Contribution £11.69 £21.34 £31.80 £58.90 £41.30
% 32% 43% 49% 59% 54%
Fixed Costs £100,609
Total Units to B/E (Fixed cost / Contribution) 2,436 Units
A 129% increase in average
contribution leads to a 56%
reduction in activity.
Machines working at 44%
capacity

16. Assumptions
• Break-even assumes that the primary goal is
to do just that
• Assumes fixed costs are truly unaffected by
change in working activity – this clearly is not
the case
• Assumes that the ability to shift the mix is
painless and seamless – this is where vision
and mission play a crucial part
• This is just a MODEL – one that adds to the
sense making and no more

17. Other performance indicators that we
should be using
• Conversion factors
Telephone calls converted to appointments or sales
Appointments (consultations) leading to sales
• Number of clients who refer
Get some granularity on who these client’s are is important
• Life-time value of your customer
• Costs for each campaign – initial and on-going
• Engagement levels by activity – gaining
consent for newsletter sign-ups etc

18. I would like to hand over to Kim.