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ASSESSMENT TASK 2
Student Name: Thim Lee
Id: BsBsus501
Performance
Market share (projected*):
Assume market share constant across all products.
Assume market share of 24% for BBQfun to calculate projected number of units to sell for each item
in FY 2012–13.
BBQs: 52,000*24%=12,600
E-commerce
BBQs: 12,600*1=12,600
Bargain Market
BBQs: 13,000*1=13,000
Bargain market
With E-commerce
= 8,988,000
=15,232,000
= 12,552,000
= $7,084,800
=$7,164,000
= $5,065,000
Operational changes
After consulting with the management team at BBQfun, you determine:
● 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
● management would like to develop people through retraining rather than hire new staff to
handle online sales
E-commerce: $7,164,000/(100%+8%)=$6,633,333
Profitability index:
E-commerce: $6,633,333/$5,484,714=1.2
Resources Costs
Additional staff $25,000 year average Additional staff costs:$250,000
Total $1,101,000
= 10 additional staff
= $25,000*10
=$250,000
= ($20,000*6) + ($10,000*3)
= $150,000
Management change leadership training for store managers and team leaders:
= $1,101,000
PART B: REPORT
Introduction
BBQ fun was established in 2009 by current CEO, Pat Mifsud. BBQ fun offers an extensive product
range, incorporating both local and imported goods. Since 2010, the increasingly competitive retail
environment, technological change, changes in consumer buying patterns and consumer confidence
has led to disappointing sales. However, BBQ fun intends to return to healthy sales of $11 million in
2012 through building on its organizational strengths, through targeted marketing strategies aimed
at key segments and through exploiting marketing opportunities. Currently, BBQ fun operates two
stores, one in Brisbane (Kenmore), and one on the Cold Coast.
BBQ fun is seeking business and marketing opportunities that could lead to interstate or national
expansion if viable and scalable.
This opportunity is to manufacture and retail own-branded barbecues and products. Manufacture
would take place at a leased plant in India as BBQ fun has no manufacturing capability. Also,
manufacture in Australia would be too expensive.
This opportunity is to offer all products in an online store. Stock could be stored at no extra cost at
existing stores. Customers would cover the delivery cost.
This option is to aim to increase market share by cutting the cost of products and aiming at mass
appeal.
-Social media is
considered not viable or
practical considering low
participation among
targeted segments.
Bargain The customer needs all Replacements think BBQfun will position
Evaluation of each opportunity in term of impact to current business and customer base.
According to the calculation in Part A, it is clear that the total market potential for upcoming
financial year (FY 2016-17) is 161,500, including 52,500 BBQs, 21,000 outdoor furniture and 88,000
BBQ accessories. As discussed in Part A, in opportunities and profit figures for calculation section, we
can easily find out that E-commerce could help BBQ fun to gain the highest sales volume, the
estimated volume would be 12,600 units for BBQs 5,040 units for Furniture and 63,360 unites for
accessories, followed by the sales volume of the use of bargain market, including 13,000 BBQs, 5,250
furniture and 56,000 accessories. The number of products that sold through own brand has occupied
the smallest proportion, they have 7,200 BBQs, 3,120 units for furniture and 40,320 for the sales
volume of accessories. When compare those three opportunities in terms of sales volume, we found
that the sales volume is significantly high when we adopt E-commerce which allows customer from
all around the Australia even other parts of the world to access and learn about BBQ, it is better to
build brand recognition and develop potential customers.
When comparing the total gross profit of those three approaches for the financial year 2016-17, we
can see that the total gross profit for Own brand is $7,084,800, $7,164,00 for E-commerce and
$5,065,000 for bargain market. As the unit contribution margin of BBQ, Furniture and Accessories of
E-commerce is much lower than that of Own brand, it results in less difference between total gross
profits of those two approaches. When comparing the total net profit of these approaches might
bring, we could see that E-commerce has the highest profit which is $1,679,286 followed by the net
profit of Own brand $200,086 and $180,286 for Bargain market. Base on the aspect of profitability,
E-commerce is the best opportunity for BBQ fun to attract more customers and generate more
revenue. All the calculations ate base on the assumption that Own branded product take 24%
market share for BBQ fun, Bargain market is assumed market share of 25% for BBQ fun, and E-
commerce takes 24% for BBQ fun. Therefore, the bargain market has greatest number of buyers
(130,000) followed by own brand products, which has 99,000 buyers, and E-commerce would gain
the smallest number of buyers, which is 97,940. However, E-commerce has the most sales volume
and relatively low fixed cost, therefore, it could generate most net profit for BBQ fun.
Images or written material must not portray any group or individual in negative, offensive
or stereotypical way on the basis of sex, gender, marital status, etc. This legislation could be
applied all three approaches. This policy is relevant to Own branded products, since the
manufacture of BBQfun would be outsourced by Indian people, we have to ensure
transaction with clients, tenants and other employees is handled family and transparently
and in accordance with organization and legal requirement.
All the strategies and sales activities must be conducted in a safe and responsible manner to
minimize risk to health and safety of BBQ fun employees and the general public.
All sales activities and campaigns must not include spam campaigns
E-commerce Add online Increase Internet and system Use the most
traffic online
Base on the calculation we can see that E-commerce has the highest return on investment and
profitability index. Therefore, based on the financial perspective, E- commerce is the best option for
BBQ fun, followed by Own brand, since the bargain market has lowest return on investment and
profitability, it would be the least option for BBQ fun to consider.
1. For the top-ranked option – E-commerce, which is assumed market share of 24% for BBQ fun, the
sales volume will be high including 12,600 unite of BBQ, 5,040 units of Furniture and 63,360 of
Accessories. So make sure that the stock should be sufficient for customer, the product should be
shipped out as soon as the customer place their order.
2. BBQ fun should hire a professional IT team to develop and maintain the online store, in order to
make the online transaction safe and smooth.
3. Need to train the staffs to online store and teach them how to update product information on the
website, they also need to learn how to help customer to modify their order or cancel their order
and help customer to solve their question.
4. BBQ fun will be needing a reconfiguring of office where place staff that dealing with customer
from online store.
6. BBQ need to put more budget for advertising for their new approach, and purchase relevant
equipment, such as computers, printers etc.
Strategies or
approaches to mitigate
ris
All the strategies and sales activities must be conducted in a safe and responsibl