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BBQfun Sales data worksheet - Assessment TASK 2 Part A

Business Professionals In Trai (University of Northern Iowa)

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Student Name: Thim Lee
Id: BsBsus501

BBQfun sales data worksheet

Market share (projected*):
Assume market share constant across all products.

Financial year Local The Yard BBQs R us Outdoorz BBQfun

(FY) independents
FY 2013–14 30% 0% 25% 23% 22%
FY 2014–15 30% 0% 27% 23% 20%
FY 2015–13 30% 0% 22% 25% 23%
FY 2016–17 30% 0% 22% 24% 24%
Sales performance:

Financial year (FY) Total sales

FY 2013–14 8,500,000
FY 2014–15 10,000,000
FY 2015–13 9,000,000
FY 2015–16 9,500,000
Estimated total market potential for FY 2012–13 (SE Qld)
Calculate potential sales for marketing opportunities.

Total market potential (with potential online sales included)

Use to calculate potential sales with e-commerce included in FY 2012–13.

Financial year BBQs Outdoor BBQ Total

(FY) Furniture Accessories
FY 2012–13 25,000 13,000 42,000 80,000
FY 2013–14 35,000 15,000 58,000 108,000
FY 2014–15 40,000 17,000 68,000 125,000
FY 2015–13 45,000 19,000 75,000 139,000
FY 2016–17 52,500 21,000 88,000 161,500

Own branded products

Assume market share of 24% for BBQfun to calculate projected number of units to sell for each item
in FY 2012–13.

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BBQs Outdoor Furniture BBQ Accessories

30,000 13,000 56,000
Number of buyers
1 1 3
$600 $850 $50
Average price

With E-commerce( assume market share of 24% for BBQs)

BBQs: 52,000*24%=12,600

Outdoor Furniture: 21,000*24%=5,040

BBQ Accessories: 88,000*24%=21,120

Opportunities and profit figures for calculation


BBQs: 12,600*1=12,600

Outdoor Furniture: 5,040*1=5,040

BBQ Accessories: 21,120*3=63,360

Bargain Market

BBQs: 13,000*1=13,000

Outdoor Furniture: 5,250*1=5,250

BBQ Accessories: 22,000*3=66,000

Bargain market

Assume market share of 25% for BBQfun.

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BBQs Outdoor Furniture BBQ Accessories

40,000 20,000 70,000
Number of buyers
1 1 3
$500 $650 $40
Average price

With E-commerce

Assume market share of 24% for BBQfun.

BBQs Outdoor Furniture BBQ Accessories

32,258 14,773 50,909
Number of buyers
1 1 3
$620 $880 $55
Average price

Opportunities and profit figures for calculation

Own brand E-commerce Bargain market

BBQ: 7,200 BBQ: 12,600 BBQ: 13,000
Sales volume (units)
Furniture: 3,120 Furniture:5,040 Furniture: 5,250
Accessories: Accessories: Accessories:
40,320 63,360 66,000
BBQ: $600 BBQ: $620 BBQ: $500
Furniture:$850 Furniture: $880 Furniture: $650
Accessories:$50 Accessories:$55 Accessories:$40
BBQ: $500 BBQ: $300 BBQ: $200
Unit contribution margin
Furniture: $600 Furniture: $420 Furniture: $220
Accessories: $40 Accessories: $20 Accessories: $10
8,988,000 15,232,000 12,552,000
Total revenue

$7,084,800 $7,164,000 $5,065,000

Total gross profit
FY 2016–17
Add lease: Add training: See approved
Additional fixed costs
$1,000,000 $50,000 budget (no change
Add labour: Add online store in fixed costs)
$500,000 development:
Add plant $100,000
(depreciation): Add new plant and
$500,000 equipment
Add labour:
Add reconfiguring

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Own brand E-commerce Bargain market

of warehouse/
office: $50,000
$200,086 $1,679,286 $180,286
Total net profit
FY 2016–17

Total revenue= Sales* Price

Own brand= (7,200*600) + (3,120*850) + (40,320*50)

= 4,320,000 + 2,652,000 + 2,016,000

= 8,988,000

E-Commerce= (12,600*620) + (5,040*880) + (63,360*55)

=7,812,000 + 4,435,200 + 3,484,800


Bargain Market= (13,000*500) + (5,250*650) + (66,000*40)

= 6,500,000 + 3,412,500 + 2,640,000

= 12,552,000

Total gross profit FY2016-17= sales* unit contribution margin

Own brand= (7,200*$500) + (3,120*$600) + (40,320*$40)

= 3,600,000 + 1,872,000 + 1,612,800

= $7,084,800

E-Commerce= (12,600*$300) + (5,040*$420) + (63,360*$20)

= 3,780,000 + 2,116,800 + 1,267,200

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Bargain market= (13,000*$250) + (5,250*$220) + (66,000*$10)

= 3,250,000 + 1,155,000 + 660,000

= $5,065,000

Total net profit: Total gross profit – total fixed cost

Own brand: $7,084,800 - $6,884,714= $200,086

E-commerce: $7,164,000 - $5,484,714= $1,679,286

Bargain market: $5,065,000 - $4,884,714= $180,286

Profitability index figures for calculation

Own brand E-commerce Bargain market

Cash flow 2016–17 (Use gross profit) (Use gross profit) (Use gross profit)
Opportunity cost 8% 8% 8%
Present value of future $6,560,000 $6,633,333 $4,689,815
cash flows
Present value of initial (Use total fixed (Use total fixed (Use total fixed
investment costs) costs) costs)
Profitability index 0.95 1.2 0.96

Operational changes
After consulting with the management team at BBQfun, you determine:

● high risk of customer service quality problems for online customers

● 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

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● since stores are overstaffed, need for online people could be met from drawing from existing
employees at the two stores

● currently no staff have online customer service skills

● management would like to develop people through retraining rather than hire new staff to
handle online sales

● six delivery trucks needed to enable distribution

● website will take 50 days to develop

● three forklifts needed

● four additional warehouse workers needed

● six additional drivers needed

● office space may need to be reconfigured.

Profitability index figure for calculation

Present value of future cash flows:

Own brand: $7,084,800/(100%+8%)=$6,560,000

E-commerce: $7,164,000/(100%+8%)=$6,633,333

Bargain market: $5,065,000/(100%+8%0=$4,689,815

Profitability index:

Own brand: $6,560,000/$6,884,714=0.95

E-commerce: $6,633,333/$5,484,714=1.2

Bargain market: $4,689,815/$4,884,714=0.96

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Available resources and costs

Resources Costs
Additional staff $25,000 year average Additional staff costs:$250,000

Plant and equipment Plant and equipment costs:

● Delivery trucks
depreciation $150,000
($20,000 each)

● Forklifts ($10,000 each)

Promotional costs $500,000
Website developers Contractors ($2,000/day) Website development cost:

Staff training Online customer service Staff training cost:$24,000

($3,000 per staff member)
Management change $3,000 each Management and leadership
leadership training for training cost:$24,000
store managers and
team leaders
Warehouse and office Reconfiguration cost:$50,000

Total $1,101,000

Available resources and costs

Additional staff = 4 additional warehouse workers + 6 additional drivers needed

= 10 additional staff

= $25,000*10


Plant and equipment depreciation= 6 delivery trucks + 3 forklifts

= ($20,000*6) + ($10,000*3)

= $150,000

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Website development= $2,000*50= $100,000

Staff training= $3,000*8= $24,000

Management change leadership training for store managers and team leaders:

Brisbane: 1 store manager + 4 sales team leaders= 5 peoples

Gold Coast: 1 store manager + 3 sales team leaders= 4 peoples

Brisbane + Gold Coast= 9 peoples

Reconfiguration of warehouse and office= $ 50,000

Total: $250,000 + $150,000 + $500,000 + $100,000 + $24,000 + $27,000 + $50,000

= $1,101,000



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.

Three marketing opportunities analysis

In BBQ fun, our teams have identified three marketing opportunities to evaluate:

• Manufacture and sell own brand

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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.

• Sell product through-commerce

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.

• Sell products at bargain prices

This option is to aim to increase market share by cutting the cost of products and aiming at mass

Marketing plan Marketing Mix Structure

Own According to the customer The expenses might BBQ fun emphasis
brand survey data, 80% of new decrease since the value over price and
builds believe Australian manufacture is back this up with a
made is important, 65% of outsourced in India. three years guarantee.
surveyed renovators and
55% of replacements would
like to buy Australia made

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E-commerce -BBQ fun’s competitors are -According to customer -Easy to establish

considering e-commerce survey data, all surveyed online store since their
option customers would like to stock could be stored
buy online and also at no extra cost at
- customers might not willing to pay for online existing stores. And
experience high quality delivery if chosen.
Customer would cover
indoor customer service
the deliver cost.
- E-commerce could
help BBQ fun target their
market everywhere they

-Social media is
considered not viable or
practical considering low
participation among
targeted segments.

Bargain The customer needs all Replacements think BBQfun will position

market products/services to be price in more important itself as a broad

competitively proceeding compare to services. assortment, quality,
relative to comparable high- and unique outdoor
end outdoor lifestyle lifestyle retailer.
options offered by

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

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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.

Policies and procedures

 Privacy Act 1988 (Commonwealth)

All marketing material and sales activity for those three opportunities must adhere to the
Privacy Act, they must not use personal images, information for marketing purposes without
express written consent. BBQ fun would collect customer’s personal information, according
to the law, BBQ fun is not allowed to leak any information about their customer or use for
other purpose.

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 Anti-Discrimination Act 1991 (Queensland)

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.

 Spam Act 2003(Commonwealth)

All sales activities and campaigns must not include spam campaigns

Strategies or approaches to mitigate risk

Major Costs Benefits Risks Approaches

Own Brand Add lease: Since the Bad communication Improve the
$1,000,000 manufacture with offshore team quality of
Add labor: would take place at a and result in poor communication
$500,000 leased plant in India, quality product and with offshore
Add plant: it helps to save cost reduce sales indirectly. team in India
$500,000 of
each product,
therefore the unit
margin for own
product is high.

E-commerce Add online Increase Internet and system Use the most
traffic online

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store break down reliable internet

development: make BBQfun more company
available and accessible
Add new backup online
plant documents or
and any data on the
equipment: regular basis
Add labor:
of warehouse:

Bargain Decreased in Attract more Low profit Set the price

Market price of each customer with base on the fixed
Bad impression because
products compelling price cost
normally people would like
to believe expensive
product would have
good quality, cheap
stuffs would not

Based on your calculation, rank the three marketing opportunities.

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.

Changes to current operations in order to take advantage of the opportunity

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

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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.

5. Staff should be trained how to communicate with customer online properly.

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
All the strategies and sales activities must be conducted in a safe and responsibl

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