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K&P, Chapter 2, # 9
The annual planning process at Century Office Systems, Inc. had been arduous but produced a number of important marketing initiatives for the next year. Most notably, company executives had decided to restructure its product-marketing team into two separate groups: (1) Corporate Office Systems and (2) Home Office Systems. Angela Blake was assigned responsibility for the Home Office Systems group, which would market the company's word-processing hardware and software for home and office-at-home use by individuals. Her marketing plan included a sales forecast for next year of $25 million. Under the new organizational structure, 40 percent of the company sales force would be dedicated to selling products of the Home Office Systems group and the Home Office Systems group would be charged with 40 percent of the budgeted sales force expenditure. The sales director's budget for salaries and fringe benefits of the sales force and noncommission selling costs for both the Corporate and Home Office Systems groups was $7.5 million. Sales representatives also received a 15 percent commission on sales of home office systems.
The advertising and promotion budget contained three elements: trade magazine advertising, cooperative newspaper advertising with Century Office Systems, Inc. dealers, and sales promotion materials including product brochures, technical manuals, catalogs, and point-of-purchase displays. Trade magazine ads and sales promotion materials were to be developed by the company's advertising and public relations agency. Production and media placement costs were budgeted at $300,000. Cooperative advertising copy for both newspaper and radio use had budgeted production costs of $100,000. The current cooperative advertising allowance policy allocated 5 percent of company sales to dealers to promote its office systems. Angela estimated that revenue elasticity with respect to cooperative advertising was .2, so that a 10%
The annual planning process at Century Office Systems, Inc. had been arduous but produced a number of important marketing initiatives for the next year. Most notably, company executives had decided to restructure its product-marketing team into two separate groups: (1) Corporate Office Systems and (2) Home Office Systems. Angela Blake was assigned responsibility for the Home Office Systems group, which would market the company's word-processing hardware and software for home and office-at-home use by individuals. Her marketing plan included a sales forecast for next year of $25 million. Under the new organizational structure, 40 percent of the company sales force would be dedicated to selling products of the Home Office Systems group and the Home Office Systems group would be charged with 40 percent of the budgeted sales force expenditure. The sales director's budget for salaries and fringe benefits of the sales force and noncommission selling costs for both the Corporate and Home Office Systems groups was $7.5 million. Sales representatives also received a 15 percent commission on sales of home office systems.
The advertising and promotion budget contained three elements: trade magazine advertising, cooperative newspaper advertising with Century Office Systems, Inc. dealers, and sales promotion materials including product brochures, technical manuals, catalogs, and point-of-purchase displays. Trade magazine ads and sales promotion materials were to be developed by the company's advertising and public relations agency. Production and media placement costs were budgeted at $300,000. Cooperative advertising copy for both newspaper and radio use had budgeted production costs of $100,000. The current cooperative advertising allowance policy allocated 5 percent of company sales to dealers to promote its office systems. Angela estimated that revenue elasticity with respect to cooperative advertising was .2, so that a 10%