Figure 8.22: Snowboard Company’s Marketing Strategy Team Report
Profit Impact of Tights Strategies
INPUT (Yellow Cells)
- No Negative Numbers
- Percentages limited to 0% to 100%
| CFO REPORT ($ millions) | RETURN | |||
| SNOWBOARD CO PRODUCT LINE | JACKETS | PANTS | TIGHTS | TOTAL |
| Revenues | $50.0 | $30.0 | $100.0 | |
| Percent Sales | 50.0% | 50.0% | 20.0% | 100.0% |
| Percent Margin | 40.0% | 50.0% | 40.0% | |
| Gross Profit | $20.0 | $15.0 | $5.0 | $40.0 |
| Sales, General & Admin. Expenses | $15.0 | $9.0 | $6.0 | $30.0 |
| OPERATING INCOME | $5.0 | $6.0 | ($1.0) | $10.0 |
| Return on Sales | 10.0% | 20.0% | -5.0% | 10.0% |
| MARKETING STRATEGY REPORT ($ millions) | ||||
| SNOWBOARD CO PRODUCT LINE | JACKETS | PANTS | TIGHTS | TOTAL |
| Revenues | $50.0 | $30.0 | $20.0 | $100.0 |
| Percent Sales | 50.0% | 50.0% | 20.0% | 100.0% |
| Percent Margin | 40.0% | 50.0% | 25.0% | 40.0% |
| Gross Profit | $20.0 | $15.0 | $5.0 | $40.0 |
| Marketing & Sales Expenses | $7.5 | $4.5 | $3.0 | $15.0 |
| Marketing & Sales Exp. (% Sales) | 15.0% | 15.0% | 15.0% | |
| Net Marketing Contribution | $12.5 | $10.5 | $2.0 | $25.0 |
| General & Admin. Expenses | $7.5 | $4.5 | $3.0 | $15.0 |
| OPERATING INCOME | $5.0 | $6.0 | ($1.0) | $10.0 |
| MARKETING PROFITABILITY METRICS | ||||
| Marketing Return on Sales | 25.0% | 35.0% | 10.0% | 25.0% |
| Marketing Return on Investment | 167% | 233% | 67% | 167% |
| CUSTOMER METRICS | ||||
| Customer Satisfaction | 74 | 77 | 72 | 75 |
| Customer Retention | 67% | 65% | 60% | 60% |
| Customer Repurchase | 73% | 76% | 68% | 73% |
| Return on Sales | 10.0% | 20% | ||
| Marketing Return on Sales | 25.0% | 40% | ||
| Marketing ROI | 167% | 300% | ||
Instruction: Change the revenues for Tights to zero to examine the profit impact of terminating this product line. Then, change the yellow cells to explore how profit performance changes for the tights product line and affects company operating income, return on sales, marketing return on sales, and marketing return on investment.