Basic Marketing: A Global Managerial Approach

Perreault−McCarthy: Basic

Marketing: A

Global−Managerial

Approach, 14/e

19. Implementing and
    Controlling Marketing
    Plans: Evolution and
    Revolution

Text © The McGraw−Hill

Companies, 2002

574 Chapter 19

13. Explain why a marketing audit might be desirable,
    even in a well-run company. Who or what kind of an
    organization would be best to conduct a marketing
    audit? Would a marketing research firm be good?
    Would the present CPA firms be most suitable? Why?


14. Various breakdowns can be used for sales analysis
    depending on the nature of the company and its
    products. Describe a situation (one for each)
    where each of the following breakdowns would
    yield useful information. Explain why.
    a.By geographic region.
    b.By product.
    c.By customer.
    d.By size of order.
    e.By size of sales rep commission on each product
    or product group.


15. Distinguish between a sales analysis and a perfor-
    mance analysis.


16. Carefully explain what the iceberg principle should
    mean to the marketing manager.


17. Explain the meaning of the comparative perfor-
    mance and comparative cost data in Exhibits 19-4
    and 19-5. Why does it appear that eliminating
    sales areas D and E would be profitable?


18. Most sales forecasting is subject to some error (per-
    haps 5 to 10 percent). Should we then expect
    variations in sales performance of 5 to 10 percent
    above or below quota? If so, how should we treat
    such variations in evaluating performance?


19. Why is there controversy between the advocates of
    the full-cost and the contribution-margin ap-
    proaches to cost analysis?


20. The June profit and loss statement for the Browning
    Company is shown. If competitive conditions make

19.Marketing Cost Analysis

This problem emphasizes the differences between the
full-cost approach and contribution-margin approach to
marketing cost analysis.
Tapco, Inc., currently sells two products. Sales com-
missions and unit costs vary with the quantity of each
product sold. With the full-cost approach, Tapco’s ad-
ministrative and advertising costs are allocated to
each product based on its share of total sales dollars.
Details of Tapco’s costs and other data are given in the
spreadsheet. The first column shows a cost analysis

based on the full-cost approach. The second column

shows an analysis based on the contribution-margin

approach.

a. If the number of Product A units sold were to increase

by 1,000 units, what would happen to the allocated

administrative expense for Product A? How would

the change in sales of Product A affect the allocated

administrative expense for Product B? Briefly discuss

why the changes you observe might cause conflict

between the product managers of the two different

products.

Computer-Aided Problem

Suggested Cases

33. Huntoon & Balbiera, P.C. 35. Romano’s Take-Out, Inc.

Hospitals

and

Retailers Schools Total

Sales:

80,000 units at

$0.70.......... $56,000 $56,000

20,000 units at

$0.60.......... $12,000 12,000

Total........... 56,000 12,000 68,000

Cost of sales........ 40,000 10,000 50,000

Gross margin........ 16,000 2,000 18,000

Sales and administrative

expenses:

Variable.......... 6,000 1,500 7,500

Fixed............ 5,600 900 6,500

Total........... 11,600 2,400 14,000

Net profit (loss)...... $ 4,400 $ (400) $ 4,000

Browning Company Statement

price increases impossible and management has cut

costs as much as possible, should the Browning

Company stop selling to hospitals and schools?

Why?