Case Study: Batesmanor
I. Problem Statement:
Primary:
Mike Hervey, the advertising consultant to BatesManor Furniture Inc., proposed the manufacturer increase their advertising expenditures by $225,000 for 2008. This would boost new product exposure, brand awareness, and enhance the quality image of the manufacturer. However, the $225,000 increase in promotions is slightly out of line with the manufacturer’s policy of budgeting 5 percent of expected sales for total promotion expenditures. Even though Mr. Bates estimates higher material costs, pricing pressures, and recent wage increases in addition to launching several new furniture styles, can he find a way to juggle funds to allocate the advertising plan while staying within the company’s budgeting policy?
Secondary:
Although Hervey recommended an additional $225,000 solely for the promotions budget, John Bott, the vice president of sales, noted sales expenses and administration costs were expected to increase a total of $135,000 in 2008. Thus, in addition to establishing funds to allocate the advertising budget, how can Chuck Bates support the budget expenditures as well?
II. Recommended Action:
During the January 9th budget meeting, John Bott announced sales of $75 million in 2007. He assumed a 4 percent increase in sales in 2008, totaling the budget to $3,975,000. Ultimately, a $147,000 increase over the 2007 budget. Out of the $147,000 increase, budgeting would need $135,000. Of the $135,000, $65,000 would fund the increased sales expenses and administration costs, and $70,000 would be directed towards hiring an additional sales representative to service BatesManor’s 50 new accounts. Due to the importance of having established sales personnel who are committed to BatesManor, I believe Mr. Bates should accommodate John Bott with $135,000 out of the $147,000 increase in order to support the budget expenditures.
According to a recent summary of furniture buying behavior published in Standard & Poor’s Industry
Primary:
Mike Hervey, the advertising consultant to BatesManor Furniture Inc., proposed the manufacturer increase their advertising expenditures by $225,000 for 2008. This would boost new product exposure, brand awareness, and enhance the quality image of the manufacturer. However, the $225,000 increase in promotions is slightly out of line with the manufacturer’s policy of budgeting 5 percent of expected sales for total promotion expenditures. Even though Mr. Bates estimates higher material costs, pricing pressures, and recent wage increases in addition to launching several new furniture styles, can he find a way to juggle funds to allocate the advertising plan while staying within the company’s budgeting policy?
Secondary:
Although Hervey recommended an additional $225,000 solely for the promotions budget, John Bott, the vice president of sales, noted sales expenses and administration costs were expected to increase a total of $135,000 in 2008. Thus, in addition to establishing funds to allocate the advertising budget, how can Chuck Bates support the budget expenditures as well?
II. Recommended Action:
During the January 9th budget meeting, John Bott announced sales of $75 million in 2007. He assumed a 4 percent increase in sales in 2008, totaling the budget to $3,975,000. Ultimately, a $147,000 increase over the 2007 budget. Out of the $147,000 increase, budgeting would need $135,000. Of the $135,000, $65,000 would fund the increased sales expenses and administration costs, and $70,000 would be directed towards hiring an additional sales representative to service BatesManor’s 50 new accounts. Due to the importance of having established sales personnel who are committed to BatesManor, I believe Mr. Bates should accommodate John Bott with $135,000 out of the $147,000 increase in order to support the budget expenditures.
According to a recent summary of furniture buying behavior published in Standard & Poor’s Industry
Cited: Better Homes and Gardens Classifieds. Better Homes and Gardens. Web. 5 Oct. 2010. . Kerin, Roger A., and Robert A. Peterson. Strategic Marketing Problems: Cases and Comments. Upper Saddle River, NJ: Prentice Hall, 2010. Print. "Martha Stewart Living Rates." Martha Stewart Living. Web. 5 Oct. 2010. . Online Color Printing Services for Brochures, Postcards, Catalogs. Web. 06 Oct. 2010. . "Powered by Rocketprint Software RocketQuotes." USA Printing Online,Catalog Printing, Brochure Printing, Presentation Folder Printing. Web. 06 Oct. 2010. . [pic][pic][pic][pic][pic]