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

Implementing and Controlling Marketing Plans: Evolution and Revolution 571

We’ve been treating sales and cost analyses separately up to this point. But man-

agement often combines them to keep a running check on its activities—to be sure

the plans are working—and to see when and where new strategies are needed.

Let’s see how this works at Cindy’s Fashions, a small-town apparel retailer. This

firm netted $155,000 last year. Cindy Reve, the owner, expects no basic change in

competition and slightly better local business conditions. So she sets this year’s profit

objective at $163,000—an increase of about 5 percent.

Next she develops tentative plans to show how she can make this higher profit.

She estimates the sales volumes, gross margins, and expenses—broken down by

months and by departments in her store—that she would need to net $163,000.

Exhibit 19-14 is a planning and control chart Reve developed to show the con-

tribution each department should make each month. At the bottom of Exhibit

19-14, the plan for the year is summarized. Note that space is provided to insert the

actual performance and a measure of variation. So this chart can be used to do both

planning and control.

Exhibit 19-14 shows that Reve is focusing on the monthly contribution to over-

head and profit by each department. The purpose of monthly estimates is to get

more frequent feedback and allow faster adjustment of plans. Generally, the shorter

Planning and Control Combined

Sales Costs 

Everybody helps 


$163,000

Exhibit 19-14 Planning and Control Chart for Cindy’s Fashions

Contribution to Store Cumulative

Store Operating Operating

Dept. A Dept. B Dept. C Dept. D* Total Expense Profit Profit

January

Planned 27,000 9,000 4,000 1,000 39,000 24,000 15,000 15,000

Actual

Variation

February

Planned 20,000 6,500 2,500 1,000 28,000 24,000 4,000 19,000

Actual

Variation

November

Planned 32,000 7,500 2,500 0 42,000 24,000 18,000 106,500

Actual

Variation

December

Planned 63,000 12,500 4,000 9,000 88,500 32,000 56,500 163,000

Actual

Variation

To t a l

Planned 316,000 70,000 69,000 4,000 453,000 288,000 163,000 163,000

Actual

Variation

*The objective of minus $4,000 for this department was established on the same basis as the objectives for the other departments—that is, it represents the same percent-

age gain over last year when Department D’s loss was $4,200. Plans call for discontinuance of the department unless it shows marked improvement by the end of the year.