BSBMKG501: Analyzing Marketing Opportunities at Adore Beauty

This report evaluates Adore Beauty's marketing situation, focusing on e-commerce, own brand, and bargain market opportunities. It includes a financial analysis of sales volume, gross and net profit, and profitability indices for each opportunity in FY 2012/13. The analysis uses numerical and statistical methods to forecast potential market sizes and assesses the impact of growth, sales, and profitability on the business. External factors such as regulations, GST implications, and competitor analysis are considered. The report justifies the ranking of marketing opportunities based on financial and non-financial factors, identifies necessary operational changes, and emphasizes the importance of maintaining quality through trained staff and efficient processes. Desklib provides access to similar past papers and solved assignments for students.

Running head: MARKETING MANAGEMENT
MARKETING MANAGEMENT

MARKETING MANAGEMENT 2
Executive summary
The primary aim of this report is to evaluate the situation of Adore beauty organization. This
organization has select E-commerce marketing opportunity as it could offer more benefits as
compared to other marketing opportunity tool. Moreover, this organization has also imply the
cost effective strategy and promotion strategy for increasing the competitive benefits and
mitigate their risk.

MARKETING MANAGEMENT 3
Assignment 2:
Sales volume for each opportunity in FY 2012/13
Own brand E-commerce Bargain market
Sales
volume
(units)
BBQ: 7200 BBQ: BBQ:
Furniture: 3120 Furniture: Furniture:
Accessories:
40,320
Accessories: Accessories:
Price BBQ: $600 BBQ: $620 BBQ: $500
Furniture: $850 Furniture: $880 Furniture: $650
Accessories: $50 Accessories: $55 Accessories: $40
Revenue
per item
(Sales
volume
units* Price
$4,320,000 $7,812,000 $5,000,000
$2,652,000 $4,435,200 $3,250,000
Goss and net profit for each opportunity FY 2012/13
Own brand E-commerce Bargain market
Total gross
profit
2012/13
$7,084,800 $7,164,000 $3,625, 000
Total Fixed
cost
$4,884,714 +
$1,000,000 +
$500,000 +
$500,000
$6,884,714
$4,884,714 + $50,000
+ $100,000 +
$150,000 + $250,000
$4,884,714 +
$0 =$4,884,714

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=6884714 + $50,000 =
5484714
Total Net
Profit
2012/13
$200,086 $1,679,286 ($1,259,714)
Use numerical analysis or statistical methods to forecast, for example, the size of potential
markets in FY2012/13.
With respect to the above table and chart, it is found that the Future performance expectation
of the cosmetic field is determined 6.5 in 2013-2018 as well as 7 and 7.76 is determined in
2019 and 2020. Apart from this, it is also found that Percentage growth for 2019 is
determined 20% while 25% is evaluated for 2020.
Impact of growth, sales, and profitability on the business (Own branded opportunity
and E-commerce marketing opportunity)
From the analysis of Worksheet, it is addressed that Cash flow 2012/13 is $7,084,800 as it is
quite lower as compared to the E-commerce marketing opportunity. Further, it is also
examined that Present value of future cash flows is obtained $6,560,000 that is less e-

MARKETING MANAGEMENT 5
commerce. From the Profitability index, it is also found that the obtained value is 0.95 that is
nearest to 1 as it could also be effective for the organization. Apart from this, it is also found
that Cash flow 2012/13 is $7,164,000 that is higher as compared to the both market
opportunities like Bargain market and Own brand. Further, it is also examined that Present
value of future cash flows is obtained $6,633,333 that is also much higher as compared to
other marketing activities i.e. $6,560,000 and =$3,356,481. From the Profitability index, it is
also found that the obtained value is 1.2 as it is more than 1. Consequently, it could be
standard value hence it can be said that the E-commerce is more effective as compared to
others strategy.
Assess external factors
Regulation and GST implication is imperative to own brand opportunity. Australian standards
consideration is used to own brand opportunity. Furthermore, E commerce Practice Model is
practice for e-commerce opportunity. ADMA (Australian Direct Marketing Association),
Code of practices of industry, marketing, and television for conducting suitable behaviour in
the organization. The following acts are considered by Australia:
 Competition and Consumer Act
 Anti-discrimination legislation
 Privacy Act
Competitors Analysis
There are two major competitors of Adore beauty organization of Australia like Jurlique
And David Jones. These online stores have offer their goods and services in higher cost as
compared to Adore Beauty. Adore Beauty could use promotion and cost effective strategy for
mitigating the risk and complete their objectives.
Profitability index for each opportunity
Own brand E-commerce Bargain market
Cash flow 2012/13 $7,084,800 $7,164,000 $3,625,000

MARKETING MANAGEMENT 6
Own brand E-commerce Bargain market
Opportunity cost 8% 8% 8%
Present value of
future cash flows
$7,084,800 / 1.08
= $6,560,000
$7,164,000/ 1.08 =
$6,633,333
$3,625,000 / 1.08
=$3,356,481
Present value of
initial investment
$6,884,714 $5,484,714 $4,884,714
Profitability index 0.95 1.2 0.69
From the above chart, it can be stated that total revenue from own brand and e-commerce is
gathered $8,988,000 and $15,732,000. Thus, it is evaluated that the sales has been more
increased by E-commerce as compared to own brand. Moreover, it is also examined that
Total Net Profit 2012/13 is obtained $200,086 from the application of own brand marketing
opportunity while $1,679,286 is gathered by use of E-commerce strategy. Thus, it is
examined that organization has given more preference to the E-commerce.
Three marketing opportunities. Justify your ranking in terms of both financial and non-
financial factors
 E-commerce
 Own brand (It could be considered knocked out because of market risk)
 Bargain market.
Identify changes to current operations in order to take advantage of the opportunity
The current store of Adobe beauty story has been need to reconfigured to accommodate
additional stock and online delivery service. Moreover, the organization has also use the
CRM and ERP software to increase the distribution by offering extra training might needed.
Justify changes on the basis of maintaining quality
There are certain qualities that might be considered in organization to maintain the quality of
organization like requisite of trained online services, sales training required, training needed
in online service employees, and additional employees are required in the warehouse.
BBQfun sales data worksheet
The cost of operation is determined by following table:

MARKETING MANAGEMENT 7
Resources Costs
Additional staff
Given: 4 additional
warehouse workers
+ 6 additional drivers
$25,000-year average Additional staff costs:
(4+6) x $25,000 =
$250,000
Plant and equipment
depreciation
● Delivery trucks
($20,000 each)
● Forklifts ($10,000 each)
Plant and equipment costs:
Given: 6 delivery trucks
$20,000 x 6 =
$120,000
Forklifts ($10,000 )
Given: 3 Forklifts $10,000 x 3 =
$30,000
Promotional costs $500,000
Website developers Contractors ($2,000/day) Website development cost:
Given: 50days $2000 x 50 =
$100,000
Staff training $ Online customer service
training $3,000 per staff
member
Staff training cost:
Given: 8 online & customer
service people $3000 x 8 =
$24,000
Management change
leadership training
for store managers
and team leaders
$3,000 each Management and leadership
training cost:
1 Brisbane store manager,
4 Brisbane team leaders,
1 Gold Coast store manager
and
3 Gold Coast team leaders 9 x
$3,000 =
$27,000
Warehouse and
office
reconfiguration
Reconfiguration cost:
(From Gross and net profit for each opportunity table –
Ecommerce – additional costs) $50,000
Total $1,101,000

MARKETING MANAGEMENT 8
Appendix
BBQfunsales data worksheet
Performance
Market share (Projected*):
Assume market share constant across all products.
Financial
year (FY)
Local
independen
ts
The
Yard
BBQ’s R
us
Outdoorz BBQfun
FY2009/10 30% 0% 25% 23% 22%
FY 2010/11 30% 0% 27% 23% 20%
FY2011 /12 30% 0% 22% 25% 23%
*FY2012 /13 30% 0% 22% 24% 24%
Sales performance:
Financial year
(FY)
Total sales
FY2008/09 8,500,000
FY2009/10 10,000,000
FY2010/11 9,000,000
FY2011/12 9,500,000
Estimated total market potential for 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 FY2012/13.
Financial year
(FY)
BBQs Outdoor
Furniture
BBQ
Accessories
Total
FY2008/9 25,000 13,000 42,000 80,000
FY2009/10 35,000 15,000 58,000 108,000
FY2010/11 40,000 17,000 68,000 125,000
FY2011/12 45,000 19,000 75,000 139,000
FY2012/13 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 2012/13.
BBQs Outdoor
Furniture
BBQ
Accessories
Number of buyers 30,000 13,000 56,000
Quantity 1 1 3

MARKETING MANAGEMENT 9
Average price $600 $850 $50
Projected number of
units
7200 3120 13440
Bargain market
Assume market share of 25% for BBQfun.
BBQs Outdoor
Furniture
BBQ
Accessories
Number of buyers 40,000 20,000 70,000
Quantity 1 1 3
Average price $500 $650 $40
Projected number of
units
10,000 5,000 52,500
With E-commerce
Assume market share of 24% for BBQfun.
BBQs Outdoor
Furniture
BBQ Accessories
Number of buyers
Quantity 1 1 3
Average price $620 $880 $55
Projected number of
units
12,600 5040 63360
Opportunities and profit figures for calculation
Own brand E-commerce Bargain market
Sales
volume
(units)
BBQ: 7200 BBQ: BBQ:
Furniture: 3120 Furniture: Furniture:
Accessories:
40,320
Accessories: Accessories:
Price BBQ: $600 BBQ: $620 BBQ: $500
Furniture: $850 Furniture: $880 Furniture: $650
Accessories: $50 Accessories: $55 Accessories: $40
Revenue
per item
(Sales
volume
units* Price
$4,320,000 $7,812,000 $5,000,000
$2,652,000 $4,435,200 $3,250,000
$2,016,000 $3,484,800 $2,100,000
Unit
contributio
n margin
BBQ: $500 BBQ: $300 BBQ: $200
Furniture: $600 Furniture: $420 Furniture: $220
Accessories: $40 Accessories: $20 Accessories: $10
Total
revenue
$8,988,000 $15,732,000 $10,350,000
Gross profit
per item
(Unit
contributio
n margin X
number of
$3,600,000 $3,780,000 $2,000,000
$1,872,000 $2,116,800 $1,100,000
$1,612,800 $1,267,200 $525,000

MARKETING MANAGEMENT 10
Own brand E-commerce Bargain market
units)
Total
gross
profit
2012/13
$7,084,800 $7,164,000 $3,625, 000
Total
Fixed cost
$4,884,714 +
$1,000,000 +
$500,000 +
$500,000 =6884714
$6,884,714 $4,884,714
+ $50,000 + $100,000
+ $150,000 + $250,000
+ $50,000 =
5484714
$4,884,714 +
$0 =$4,884,714
Total Net
Profit
2012/13
$200,086 $1,679,286 ($1,259,714)
Profitability index figures for calculation
Own brand E-commerce Bargain market
Cash flow 2012/13 $7,084,800 $7,164,000 $3,625,000
Opportunity cost 8% 8% 8%
Present value of
future cash flows
$7,084,800 / 1.08 =
$6,560,000
$7,164,000/ 1.08 =
$6,633,333
$3,625,000 / 1.08
=$3,356,481
Present value of
initial investment
$6,884,714 $5,484,714 $4,884,714
Profitability index 0.95 1.2 0.69
Operational changes
After consulting with the management team at BBQfun, you determine:
● high risk of customer service quality problems for online customers
● high risk of staff misunderstanding changes and considering online sales as threat
to jobs
● eight online sales and customer service people will be needed to manage increased
online customers
● since stores are overstaffed, need for online people could be met from drawing
from existing employees at the two stores
● currently no staff have online customer service skills
● management would like to develop people through retraining rather than hire new
staff to handle online sales
● six delivery trucks needed to enable distribution
● website will take 50 days to develop
● three forklifts needed
● four additional warehouse workers needed
● six additional drivers needed
● office space may need to be reconfigured.
Available resources and costs
Resources Costs
Additional staff
Given: 4 additional
warehouse workers
$25,000-year average Additional staff costs:
(4+6) x $25,000 =

MARKETING MANAGEMENT 11
Resources Costs
+ 6 additional drivers $250,000
Plant and equipment
depreciation
● Delivery trucks
($20,000 each)
● Forklifts ($10,000 each)
Plant and equipment costs:
Given: 6 delivery trucks
$20,000 x 6 =
$120,000
Forklifts ($10,000 )
Given: 3 Forklifts $10,000 x 3 =
$30,000
Promotional costs $500,000
Website developers Contractors ($2,000/day) Website development cost:
Given: 50days $2000 x 50 =
$100,000
Staff training $ Online customer service
training $3,000 per staff
member
Staff training cost:
Given: 8 online & customer
service people $3000 x 8 =
$24,000
Management change
leadership training
for store managers
and team leaders
$3,000 each Management and leadership
training cost:
1 Brisbane store manager,
4 Brisbane team leaders,
1 Gold Coast store manager
and
3 Gold Coast team leaders 9 x
$3,000 =
$27,000
Warehouse and
office
reconfiguration
Reconfiguration cost:
(From Gross and net profit for each opportunity table –
Ecommerce – additional costs) $50,000
Total $1,101,000

MARKETING MANAGEMENT 12
Assessment Outcome
 Satisfactory  Unsatisfactory
Comments:
Trainer’s signature _____________________________ Date ______________________
Student Signature: ______________________________ Date _____________________