Marketing Application & Practices

A project on

MARKETING PLAN-
ROYAL MILK

Submitted to
Prof. Maumita Roy

Submitted by
RAKESH BHOIR 63
AMIT GOWINDANI 70
AJITA JOSHI 77
KUNHIMUDDIN 84
BALAJI NADAR 91

MMS-B

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 ACKNOWLEDGEMENT

We are very grateful to Ms Maumita Roy for teaching us curriculum of

Marketing application and practices. Her versatile knowledge in
marketing field and unique teaching style has developed our knowledge
and cleared many marketing concepts.

We are all the most grateful to her for assigning this project, which has
further helped us in evaluating many interrelated dimensions of marketing
field.

Finally we bestow our thanks to ROYAL FOODS LIMITED and all the
people who has directly or indirectly supported us with their assistance and
guidance to compose this report and accomplish broader vision to visualize
things in marketing concepts.

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 TABLE OF CONTENTS
TOPICS PAGE NO
EXECUTIVE SUMMARY 5
INTRODUCTION 6
PRODUCTS 7-8
SITUATION ANALYSIS 9
COMPETITORS 10-11
COMPANY PROFILE 12-13
MARKETING STRATEGIES 14-15
MARKETING MIX 16-18
SWOT ANALYSIS 19-22
PORTER’S FIVE FORCES 23-26
PROFIT AND LOSS A/C 27
BALANCESHEET 28
BREAK EVEN ANALYSIS 29-30
REVIEW AND CONTROL 31
CONTINGENCY PLAN 32

PREFACE

This Marketing Plan is prepared for the course of “Marketing Application

and practices” on ROYAL MILK is a product of Royal Foods Limited.

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In this marketing plan we have covered the industry analysis, target market
of the product, pricing, product, promotion, and distribution strategies for
the product. We have given the details about the strategy implementation
and details of promotion budget.

We have covered almost all aspects of the marketing plan

EXECUTIVE SUMMARY

Royal Dairy is a brand of dairy products sold all over Maharashtra. It first went on sale in
the Maharashtra of 2010. The marketing plan highlights the marketing strategies, target
markets and their positioning. This marketing plan includes situation and category
analysis of the dairy industry and the major companies at the forefront. Product/Brand
Strategy and Supporting Marketing Programs for dairy products are explained in detail.

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MISSION

“Build branded food business to improve quality of life by offering tasty, affordable and
highly nutritional products to our consumers while maximizing share holders value”.

VISION

“Most innovative and fastest growing food company offering products enjoyed in every
home every day”.

OBJECTIVE
Our company aims is to provide remunerative returns to the farmers and also serve the
interest of consumers by providing quality products which have good value for money.

INTRODUCTION

We are pleased to introduce our organization Royal Foods Ltd. (Maharashtra Co-
operative Milk Marketing Federation Ltd (MCMMF) as Maharashtra’s largest food
products marketing organization with annual sales turnover of more than 500 cr. We
manufacture and market a wide range of dairy products in Maharashtra and abroad
under the brand names of Royal Dairy Products. MCMMF has 10 affiliated dairy plants
with a total milk handling capacity of 6 million liters per day. The total milk drying
5
capacity is 510 MT per day. MCMMF is also the largest exporter of dairy products from
India.

The product categories are Infant Milk Food, Skimmed Milk Powder, Full Cream Milk
Powder, Table Butter, Cheddar Cheese, Mozzarella Cheese, Cheese Spreads, Ghee,
Sweetened Condensed Milk, Chocolates, Malted Milk Food, Fresh milk, Ice-ream and
ethnic Indian sweets. Each of our products is a market leader in Maharashtra.

MCMMF is the largest exporter of dairy products from India. We have won 9 awards
consecutively from, Govt of India.

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PRODUCTS
Royal Cheese Spread

Milk made Whipping Cheese Cream is made Royal Dairy cheese and can be used as
dessert. The Milk made Whipping Cheese Cream is available under the brand name of
"Naarmann". We offer Milk made Whipping Cheese Cream. We supplies a wide range
of processed food products like cheese, pasta, poultry products and different types of
snacks. The Milk made Whipping Cheese Cream comes in packed form in the quantity
1 kg and retains all the goodness and nutritional value.

Royal Butter

Pure Milk Cream Butter is made by churning fresh or fermented cream or milk and is
packed properly ensuring all the nutritional values remain intact. We offer Pure Milk
Cream Butter. The Pure Milk Cream Butter is widely used as a spread and a condiment
as well as in cooking applications such as baking, sauce making and frying.

Milk and Dairy Products

We manufacture Milk Based Flavoured Drink. We are an ISO 9000 certified company
offering a wide range of dairy products like Milk Powder, Ghee, Cheese, Butter, Dahi
and proprietary foods such as Dairy Whitener and Gulab Jamun Mix powder. The Milk
Based Flavoured Drink, available under the brand name "Chass" is a 100% natural
thirst quencher, made from milk solids, common salt, spices and condiments. The Milk
Based Flavoured Drink comes in 3 exciting flavours of Jeera, Masala and Plain in 200ml
packs.

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Royal Ghee

Royal Dairy manufactures Cow’s Milk Ghee in Clear and Pleasant Flavor. Royal Dairy
Products supplies milk powder, skimmed milk powder, dry milk powder, diary milk
powder, desi ghee, ghee, pure ghee, cow ghee, cow milk powder, instant milk powder,
and diary whitener. The Cow’s Milk Ghee in Clear and Pleasant Flavor is a desi ghee
which is pasteurized cream derived from Pure Cow’s Milk. It is light yellow in color [at 1 -
5 Degree Cel. and is free from particles with a smooth fine grain structure. This ghee
has a clear and pleasant flavor, free from sour, bitter or rancid taints.

Royal Ice Cream

Royal Dairy supplies Ice Cream Cone Sleeves of 50ml Size. We manufactures cone
sleeves with auto rolling mechanism for ice cream cones requirements by ice cream
industry. Ice Cream Cone Sleeves of 50ml Size are used for sugar rolled ice cream
cones. Ice Cream Cone Sleeves of 50ml Size are the cone jackets which provide
effective protective packaging for waffle cones, drumsticks and cornettos. These ice
cream cone sleeves are available in multi color printing. These are available in sizes
ranging from 50 ml to 150 ml.

Badam Milk

Royal Dairy Product Ltd supplies Badam Milks. We manufacture ice-cream, milk
products, dairy ingredients products and beverages. The Badam Milks under the brand
name ‘Aaros’ is made from pure creamy milk from a high quality dairy. The Badam Milks
are tasty, thick and full of strength.

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SITUATION ANALYSIS

The management analyzed the situation using the 4 C approach. 4C stands for
Customer, Competitors, company and context.

Customers

Market Segmentation

Market segment is a very important function for the market department of the Royal,
because the market consists of buyers different in many ways. They are different in their
wants resources, locating buying practices. Because buyers have unique needs and
wants, each buyer is potentially separate market.

Geographic segmentation

Under these variables, MCMMF has divided market into different geographic units such
as region, states, cities etc. MCMMF sells its products by geographic segment action
like in the north where production of milk is very high the sale of Royal’s product is not
much. But in the western region it is high. MCMMF identifies this kind of variables and
deals with it.

Demographic Segmentation

Under this variable MCMMF has divided market into several segments such as age,
gender, family, size, income, occupation etc. For each group MCMMF marketing
strategy is different. In milk Royal targets all the class where as in the other products
like butter, ghee, ice-cream etc. it targets to the middle and higher middle class.

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COMPETITORS

The Indian market is dominated by a large number of small local and regional players.
There are an estimated 150 manufacturers in the organized segment, which accounts
for 30-35% of sales and about 1000 units in the unorganized segments of the market. In
the organized segment the significant brands are Kwality Walls, Vadilal, Amul, Havmor,
Mother dairy and Baskins & Robbins. Royal is facing very tough competition from both
in and outside India.

Royal combats competition from its competitors by providing quality products at a price
which its customers value. Along with good quality products and reasonable price the
packaging is also very good. Most of its products are available in many flavors.
Excellent advertising backs its products and helps Royal to leave its competitors a
tough time.

Competitors for various products are

Butter

• Britannia
• Nestle
• Amul

Cheese

• Britannia
• Amul

Baby Food

• Nestle
• Amul
• Heinz

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Ice creams

• Amul
• HLL

Curd

• Nestle
• Mother Dairy
• Amul

Ultra High Treated Milk

• Amul
• Nestle
• Britannia

Sweet Condensed milk

• Nestle
• Amul

Flavored Milk

• Amul
• Britannia
• Nestle

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Company

Company Name :-

Royal Food (Maharashtra Co-operative Milk Marketing Federation Ltd.)

Business Type :- Manufacturer

Product/Service (We Sell):

Fresh milk, Skimmed Milk Powder, Butter, Cheese, Cheese Spreads, Ghee, Condensed
Milk, malted milk food, Ice-cream & Badam Milk.

Number of Employees : 500 - 1000 People

Company Website URL : http://www.Royaldairy.com

Ownership & Capital

Year Established : 2008

Legal Representative/Business Owner: Rakesh Bhoir

Trade & Market

Main Markets in Maharashtra
• Mumbai
• Gujarat [Kacch]
• Nasik
• Pune
• Satara
• Kolhapur

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Total Annual Sales Volume : Above 500cr

Factory Information

No. of R&D Staff : Above 100 People

PRODUCT TAKEN
We are concentrating on the rural as well as urban area.

Royal milk [Tetra pack]

PRODUCT QUANTITY PRODUCT [Rs]
250ml 20
350ml 30
500ml 45
1ltr 70

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Marketing Strategies

4 MAIN STRATEGIES

What goes into the ‘contract’ that is a brand name?

First is quality. No brand survives long if its quality does not equal or exceed what the
buyer expects. There simply can be no compromise. That’s the essence of the contract.
In the case of a food product, this means that the brand must always represent the
highest hygienic, bacteriological and organoleptic standards. It must taste good, and it
must be good.

Second is value for money. If our customer buys an Royal product, she gets what she
pays for, and more. We have always taken pride in the fact that while we earn a good
income for our owners – the dairy farmers of Maharashtra – we don’t do it at the cost of
exploiting the consumer. Even when adverse conditions have reduced supplies of
products like butter, we have resisted the common practice of raising prices, charging
what the market would bear. Rather, we have kept prices fair and done our best to
ensure that retailers do not gain at the consumers’ expense.

Third is availability. A brand should be available when and where the customer wants it.
There is no benefit achieved in creating a positive brand image, and then being unable
to supply the customer who wants to buy it. In our case, over the years we have built
what is probably the nation’s finest distribution network. We reach hundreds of cities
and towns through a cold chain that not only ensures that our products are available,
but they reach the customer at the farthest end of the country with the same quality as
you would find in Mumbai or Satara.

Fourth is service. We have a commitment to total quality. But, occasionally, we may

make a mistake – or, our customer may think we’ve made a mistake, and the customer,
as they say, is always right. That is why, for Royal, every customer complaint must be

14
heard – not just listened to. And, every customer complaint must be rectified to the
extent humanly possible.

Segmentation

Royal Dairy Segmentation Strategies

• Wide range of product categories caters to consumers across all market
segments.
For example, Royal Kool is targeted at children, while teenagers prefer Kool
Café, as it has a cool imagery associated with it.
• Segmentation is not as easy in curd and low fat products, due to mixed
audiences, various culinary applications, eg. Ghee, butter and cheese. In India,
the most used spread is ghee, then butter, cheese, low fat butter,cheese spread.

Target Markets

Royal Dairy Targeting Strategies

 Changing retail environment
 There are now 400 Royal parlours across the state, which contributed 3% to the
brand’s total turnover last year.

Positioning

Royal Dairy Positioning Strategies

 A mass market player, no premium offerings
 USP – Quality with affordability
 Up against niche players – value addition to customers
 Sheer size and scale of operation
 New offerings for health conscious and vibrant India – Health and energy drinks

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Marketing Mix

PRICE: Royal Dairy Pricing Strategies

At the time Royal Dairy was formed, consumers had limited purchasing power, and
modest Consumption levels of milk and other dairy products. Thus Royal Dairy adopted
a low-cost price strategy to make its products affordable and attractive to consumers by
guaranteeing them value for money.

Despite competition in the high value dairy product segments from firms such as
Hindustan Lever, Nestle and Britannia, MCMMF ensures that the product mix and the
sequence in which Royal Dairy introduces its products is consistent with the core
philosophy of providing butter at a basic, affordable price to appeal the common
masses. This helped Royal Dairy to create its brand image in the household sector of
the society.

PLACE: Royal Dairy Place Strategies

MCMMF is India's largest exporter of Dairy Products. It has been accorded a "Trading
House" status. MCMMF has received the Award from Government of India for
Excellence in Dairy Product Exports for the last 10 years.

Currently Royal Dairy has 2.41 million producer members with milk collection average of
5.08 million liters/day.

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PROMOTION: Royal Dairy Promotion Strategies

Objectives

 To create brand loyalty

 To encourage repeat and multiple purchases
 To promote sales and increase market share

Strategies

 To position various products as an increasingly visible brand within the market.

 To gain trust and familiarity from the target market through contests and free
samples.
The butter, which had been launched in 2008, had a staid, boring image, primarily
because the earlier advertising agency which was in charge of the account preferred to
stick to routine, corporate ads. They didn’t help in creating a brand image of Royal
butter which was their then motive. The image they presented was, well, boring.

In order to maintain the sales of Royal products, sales promotion is implemented to

generate growth

Sales Promotion Execution

Tactics

 Broadcast – Television, Radio

 Print – Newspapers
 Packaging- add graphics
 In Store – Posters, Flyers, Stall

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ADVERTISING: Royal Dairy Advertising Strategies

Its advertising has also started using tongue-in-cheek sketches starring the Royal
baby commenting jovially on the latest news or current events. This formed a large
chunk of the collective memory of us Indians. We grew with them as the ads grew
with us. They are quirky, poke fun at no one in particular and are pure eye-candy! We
almost admire the speed with which the ad-people come up with copy and illustration
for the ads that change every few days!!

From the Nineties, the Royal ads have come a long way. While most people agree
that the Royal ads were at their peak in the Nineties they still maintain that the Royal
ads continue to tease laughter out of them.

The Royal ads are one of the longest running ads based on a theme, now vying for
the Guinness records for being the longest running ad campaign ever.

BRANDING: Royal Dairy Branding Strategies

The first products with the Royal brand name were launched in 2008. Since then, they
have been in use in millions of homes in all parts of India, and beyond. There is
something more, though, that makes the Royal brand special and that something is
the reason for the commitment to quality and value for money. Royal is the brand
name of 2 million farmers, members of 10,000 village dairy cooperative societies
throughout Maharashtra. This is the heart of Royal, it is what gives strength to Royal,
and it is what so is special about the Royal Dairy Products.

The Royal Pattern has established itself as a uniquely appropriate model for rural
development. Royal has made India one of the largest milk producers in the world.
Royal, therefore, is a brand with a difference. That difference manifests itself in a
larger than life purpose. The purpose freedom to farmers by giving total control over
procurement, production and marketing.

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SWOT Analysis

Strengths

 Demand profile: Absolutely optimistic. Milk being a necessity product, the

demand will stay and the sales at Royal are bound to increase over a period of time.

 Margins: Quite reasonable, even on packed liquid milk. The margins are
enough to limit the entry of potential entrants.

 Availability of raw material: Abundant. Presently, more than 80 per cent of

milk produced is flowing into the unorganized sector, which requires proper
channelization. Large number of dairy plants in public and cooperative sectors
besides several others coming up in the private sector would result in competition.
Because of this the end consumer would benefit and a good product mix would
emerge.

 Technical manpower: Professionally trained, technical human resource pool.

The employees of MCMMF are highly recognized in the industry and have earned
name for themselves as well as the federation.

 Transportation: The transportation facilities and the easy availability of the

special trucks have provided a boost. Cold refrigerated trucks are there in place and
the warehouses also have the cold storage facilities that facilitate the
transportation.Increasing purchase power and changing tastes of the consumers: The
purchasing power of the residents is increasing. As a result a lot of products are being
consumed. Moreover, the consuming habits are changing. As a result, the demand
for products such as butter and cheese is increasing at a very rapid rate.

Weaknesses

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 Lack of control over yield: Theoretically, there is little control over milk yield.
A lot depends upon the monsoon in the country. This is because of the quality of
cattle feed that would be available will not have the required nutritional content.

 Logistics of procurement: Woes of bad roads and inadequate transportation

facility make milk procurement problematic. All these factors lead to perishability of
the procured milk. But with the overall economic improvement in India, these
problems would also get solved.

 Erratic power supply: The erratic power supply would cause harm in the
processing of milk.

 Lack of proper implementation: Dairy development programmes have not

been fully implemented as per the needs of the region in different agro-climatic zones.

Opportunities

If dairy entrepreneurs are looking for opportunities in India, the following areas must be
tapped:

 Competition: With so many newcomers entering this industry, competition is

becoming tougher day by day. But then competition has to be faced as a ground
reality. The market is large enough for many to carve out their niche. Moreover
due to competition, there is a chance to better serve the market with innovative
products.
 Value addition: There is a phenomenal scope for innovations in product
development, packaging and presentation. Given below are potential areas of
value addition:

• Steps should be taken to introduce value-added products like shrikhand, ice

creams, paneer, flavored milk, dairy sweets, etc. This will lead to a greater

20
 presence and flexibility in the market place along with opportunities in the field of
brand building.
• Addition of cultured products like yoghurt and cheese lend further strength - both
in terms of utilization of resources and presence in the market place.
• Yet another aspect can be the addition of infant foods, geriatric foods and
nutritional.

 Export potential: Efforts to exploit export potential are already on. Following the
new GATT treaty, opportunities will increase tremendously for the export of agri-
products in general and dairy products in particular. There is a strong basis of
cost efficiency, which MCMMF can leverage in the world market.
 IT support: Software is now available for project formulation for dairy enterprise.
It has also computerized its production processes.

Threats

• Milk vendors, the un-organized sector: Today milk vendors are occupying the
pride of place in the industry. Organized dissemination of information about the harm
that they are doing to producers and consumers should see a steady decline in their
importance.
• Infestation: There are increasing incidents of chemical contaminants as well as
residual antibiotics in milk.
• Quality: The quality of the milk is found to be poor as compared to the
international standards. One of the reasons for these according to the EU and America
is the method of milching the milk. In these nations the milk is hands by the farmers
owning the cattle do milched with the help of machines.
• Exploitation: The liberalization of the Dairy Industry is likely to be exploited by
the multinationals. They will be interested manufacturing the milk products, which yield
high profits. It will create milk shortage in the country adversely affecting the consumers.
• Subsidy by Western Nations: There have been incidences wherein the
Western nations subsidizing the dairy products by a few means like transportation.

21
 Because of such reasons the final price of the product goes below the prices prevailing
in the Indian Market. Hence it proves a threat to MCMMF’s and other Indian dairy
products.
• Creation of Non Tariff Barriers by Developed Nations: The Developed
Nations have created Non Tariff Barriers related to Quality of the milk specifically. They
want that the milk be processed with potable Air and Water. They also want that the
milching of cattle be done with the help of machines. However this type if system is yet
to evolve in India.
The study of this SWOT analysis shows that the ‘strengths’ and ‘opportunities’ far
outweigh ‘weaknesses’ and ‘threats’. Strengths and opportunities are
fundamental and weaknesses and threats are transitory. Any investment idea
can do well only when you have three essential ingredients: entrepreneurship
(the ability to take risks), innovative approach (in product lines and marketing)
and values (of quality/ethics).

Michael Porter’s Five-Force Analysis

 According to Porter (1980) a firm must be analyzed in relation to its industry.

Factors outside the industry tend to influence all the industry’s firms in the same
way and are thus not as important to study.

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 To a large extent, industry structure governs the strategies open to the firms. The
profitability and attractiveness of an industry is dependent of the level of
competition. Competition in an industry originates from industry structure and
goes well beyond the behavior of individual competitors.

 According to Porter, each industry has a potential profitability and the profitability
for the firms is dependent on the competitive forces in the industry. Porter
identifies five competitive forces that derive from the ambition to obtain as large
share of the profitability as possible. The five forces are the foundation of the
five-force model.

The success of the national and local competitor’s brands includes effective
distribution system, advertising, good pricing policy etc. The factors ascribed by
porter are:

• Threats of new entrants

• Bargaining power of suppliers
• Bargaining power of buyers
• Rivalry among competitors
• Threats from substitutes

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 These factors can be explained in context to MCMMF as below:

Threats of New Entrants

 Economies of Scale: MCMMF enjoys economies of scale, which is difficult to

match by any other competitor. It is because of this reason that no regional
competitor has grown to a national level.’

 Cost and Resource advantages: Royal dairy is co-operative society. That

means “cooperation among competitive” is the fundamental principle. Royal dairy
is managed under the norms of MCMMF and market the products under the
brand name ‘Royal’, which has a very good reputation at domestic level. Here,
the raw material procurement is very difficult for the new entrants. Consequently
Capital requirement is also high. Still new entrants are emerging such as
domestic and international players. So the threats of new entrants are moderate.

 Brand Preferences and Consumer Loyalty: The level of preference specifically

in the liquid milk sector is that they would go to other retailer if the retailer does
not have milk.

 Access to Distribution Channels: The distribution channel of MCMMF is a very

planned and perfect one. For any new entrant to enter it would be a very difficult
task.

 Capital Requirements: The total investment required in the industry is huge and
is a decision worth considering even for MNC’s. The investment decisions cover
the processing costs as well as the marketing costs.

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Bargaining power of supplier

 The objective of Royal dairy is not profiting. As it is a part of co-operative society,

it runs for the benefit of farmers those are the suppliers of milk and users of milk
products. According the concept of the cooperative society supplier has
bargaining power to have a good return on his or her supply. However, supplier
has limited rights to bargain with the cooperative society because it is made and
run for the sake of mass and not for individual benefit. But it is made sure that the
supplier gets his fair share of return.

 There is appropriate bargaining power of the supplier. In olden days there were
not any kind of cooperative societies as the farmer was exploited. But, nowadays
the farmer’s rights are protected under the cooperative rules and regulations,
which ultimately results in moderate power of bargaining from the supplier.

Bargaining power of buyers

 Cost of switching to competitor brands: The switching of brands is seen very

much in products such as ice cream, curd, milk powders, milk additives etc. but it
can be seen comparatively less in liquid milk category. Even if the buyers shift to
the other brands of milk, the value that they get is less than they would get from
consuming Royal.
 Large no. of buyers: Milk is a necessity product and hence is a mass product. It
has a considerable share of the rupee spent by any Indian. Moreover the buyers
are spread evenly over the country and do not have any bargaining power.

Rivalry among competitors

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  Demand for the product: The demand of the products of MCMMF is increasing
at a very healthy rate. To stand against the rivalry MCMMF is coming with a
wide range of products.

 Mergers and Acquisitions: As such in the industry there are no mergers or

acquisitions. However if any MNC wishes to enter through this route then the
competition might be severe.

Threats Of Substitute

 Availability of attractive priced substitutes: Different substitutes are available

for different category of products. There is ample availability of low priced
substitutes from local vendors and retailers. This is a front where MCMMF is still
finding hard to combat.

 Satisfaction level of substitutes: Customers do consider these products as

equal on quality if not better then the products of MCMMF. Hence the rate of
customers switching to the substitutes is very high. Moreover the buyers also can
switch to the customers easily without any hurdles.

 Not immediate substitutes: Distant substitutes are present in many of the

categories of business of MCMMF. For example in the Masti Buttermilk category
it faces competition from cold drinks and ice cream.

These 5 forces interact among themselves at different degrees over a period of

time. Moreover it will get intense or loosen up depending upon the moves of its
competitors, buyers, suppliers, etc. However MCMMF has been able to
outperform on almost all fronts excluding a few lines of business.
Estimated Profit and Loss account

26
 [RS IN CRORE]

PARTICULAR 2011[RS] 2012[RS]

SALES TURNOVER 500.00 600.00

Total cost of sales

500.00 600.00
EXPENCES

Material Consumed 438.66 480.44

Manufacturing Expenses 7.28 9.44

Personnel Expenses 1.58 2.19

Administrative Expenses 1.30 2.03

New location setup 6.87 7.87
Cost of sales 455.69 501.97

Operating profit 44.31 98.03

Other Recurring Income 0.10 0.10

Adjusted PBDIT 44.41 98.13

Depreciation 4.78 11.19

PBT 39.63 86.94

Estimated balance sheet

[RS IN CRORE]

27
 PARTICULAR 2011[RS] 2012[RS]
SOURCES OF FUNDS

Owned funds 500.00 600.00

Reserve and Surplus 39.63 86.94

TOTAL 539.63 686.94

APPLICATION OF FUNDS

1.Fixed asset

Gross block 111.22 125.23

Less : Revaluation Reserve 0.00 0.00

Net block 111.22 125.23

2.Investment 0.00 0.00

3.Net current assets 480.47 601.31

Less: current liabilities 52.06 39.60

Total net current asset 428.41 561.71

Total 539.63 686.94

BREAK EVEN ANALYSIS

1. 2011 2012
SALES- 500 600

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[-]VARIABLE COST 200 400
_____ _____
CONTRIBUTION 300 200
FIXED COST 100 100
_____ _____
PROFIT 200 100

2. P/V RATIO=CONTIBUTION
____________
SALES
2011 2012
300 200

500 600
=60% =33.33%

3. To determine the break even volume

BEP SALES=FIXED COST
__________
P/V RATIO
2011 2012
100 100
60% 33.33%
=166.67 =300

4. The total cost of 2011 for the annual volume of production-400

units
A. Total cost of 2011=Fixed cost + variable cost * quantity produced
2011
=100+200*400

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=100+80000
=80100
2012
=100+400*400
=100+160000
=160100

Review and Control

Marketing Metrics

30
*0 External- to measure the customer satisfaction and the response rates,
customers loyalty, and the quantity of the products being purchase and the time
basis of one’s customer in buying the product. Some may be form in survey.

*1 Internal-quantification of the market share and market penetration.

 Secondary data:
 Internal
• Sales record
• Stock record
• Accounting record
• Distribution date
• Sales person‘s opinion
 External
• Government statistics
• Specialist business organizations
• Customer database
 Primary data
• Face to face
• Observation
• Experiment
• Research

Contingency Plan

31
 If we receive negative feedback from our new developed product, we could make
it more affordable or improve flavor.

 If new developed products will not be successful globally, we will first focus on
positioning one country at a time.

 If we receive negative feedback from our market with extensive health concerns,
we will make a strategy that will promote wellness.

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