Name: Bisman Fatima

Class: A2

9609 32 October November 2018

Q1: Analyse the benefits to DLR of the elasticity concept when developing the new marketing plan ?
(10)

Answer: This question demands the analysis of the benefits to DLR of elasticity concept while developig
a new marketing plan. Before jumping on the benefits, we need to know what a marketing plan is,
together how an elasticity concept can be defined. A marketing plan is a detailed report on a marketing
strategy containing research findings, objectives, marketing mix and budget inorder to interest potential
customers and clients in your product or services and persuade them to buy what you offer. Where as,
Elasticity measures the responsiveness of demand to a change in one of its determinants e.g. price
elasticity of demand (PED) , income elasticity of demand, cross elasticity of demand. Talking about PED, it
will guide DLR to plan about how much to spend on the marketing budget, income elasticity of
demand(YED) will help DLR understand the impact of expected changes in income on demand and cross
elacticity of demand will measure the responsiveness of demand for a product following the change in
price of another product. Over all, use of the elasticity concept will reduce the risk of failure.

Considering the current situation, DLR intends to increase prices for accommodation, so they will need
to consider the impact of PED on demand and the knowledge of PED will also help DLR to make
decisions about the discounts to be offered in the off-peak season. Line 40 of the case study tells that
the new Marketing Director, Alec Vye, spent two months developing a new marketing plan to achieve the
objective of a 10% market share, so Promotional elasticity of demand will influence the design of the
marketing plan to achieve the goal of a 10% share of the holiday park market. There is a forecasted GDP
growth of 3.5% which means that YED will be smaller than zero as increase in incomes will cause a
reduction in demand as people will prefer to buy high quality goods.

(ANALYSIS)

Q2: (a) Refer to Appendix A and lines 74–79. Produce a forecast Income Statement for the year ending
30 September 2019. Assume no other changes? (6)

Answer:

Year ending, 30 September 2019

$m

revenue: 80x11 = 88
cost of sales: 10x1.05 = 10.5

gross profit: 88-10.5 = 77.5

expenses: 53+2 = 55

operational profit: 77.5-55 = 22.5

financial expenses: 5

profit before tax: 22.5-5 = 17.5

corporation tax @ 15%: 17.5x0.15 = 2.625

profit of the year: 17.5-2.625 = 14.875

dividends: 0.4x14.875 = 5.95

retained earnings: 14.875-5.95 = 8.925

Q2: (b) Using your result to 2(a) calculate the forecast gross profit margin for

2019? (2)

Answer: Gross profit margin = gross profit divided by revenus multiplied by 100

77.5 divided by 88 multiplied by 100 = 88.1 %

Q2: (c) Discuss the usefulness of forecast Income Statements to the directors of DLR? (12)

Answer: The income statement forecast is one of the main statements within a business plan. It shows a
business’s financial performance over an accounting period. Directors od DLR can use the forecast
income statement to encourage investment in the company as it is useful when seeking finance. It will
monitor the performance of DLR and conclude either is can be forecasted to generate profits or not.