McGraw-Hill/Irwin © 2003 The McGraw-Hill Companies, Inc., All Rights Reserved.

McGraw-Hill/Irwin © 2003 The McGraw-Hill Companies, Inc., All Rights Reserved. Chapter Fourteen Measuring and Delivering Marketing Performance

McGraw-Hill/Irwin © 2003 The McGraw-Hill Companies, Inc., All Rights Reserved. Exhibit 14.2 The Control Process Setting standards of performance Specifying the necessary feedback data Obtaining the needed control data Evaluating feedback data -- explaining gap between actual and given standards of performance Taking corrective action

McGraw-Hill/Irwin © 2003 The McGraw-Hill Companies, Inc., All Rights Reserved. Exhibit 14.5 Finding Product or Entry Profitability with Full Costing and Marginal Contributions Methods ($000) (1 of 2) Net sales Less: Costs of goods sold - includes direct costs (labor, material, and production overhead)* Gross margin Expenses Salesforce - includes direct costs (commissions) plus indirect costs (sales expenses, sales management overhead)+ Advertising - includes direct costs (media, production) plus indirect costs (order processing, warehousing costs) Full costing $5,400 3,800 $1, Marginal contribution $5,400 3,800 $1, * Production facilities dedicated to a single product. + Multiproduct salesforce.

McGraw-Hill/Irwin © 2003 The McGraw-Hill Companies, Inc., All Rights Reserved. Exhibit 14.5 Finding Product or Entry Profitability with Full Costing and Marginal Contributions Methods ($000) (2 of 2) Expenses (cont.) Physical logistics - includes direct costs (transportation) plus indirect costs (management overhead) Occupancy - includes direct costs (telephone) plus indirect costs (heat/air, insurance, taxes, building maintenance) Management overhead - includes direct costs (product/brand manager and staff) plus indirect costs (salaries, expenses, occupancy costs of SBU’s general management group Total Profit before taxes Contribution to fixed costs and profits Full costing Marginal contribution $950 $ $1,230 $370

McGraw-Hill/Irwin © 2003 The McGraw-Hill Companies, Inc., All Rights Reserved. Exhibit 14.6 Effect of $300,000 Increase in Sales Resulting from Increased Sales Commissions and Expenses of $35,000 Net sales Less: direct costs (29.62%) Expenses Sales commissions and expenses Advertising Physical logistics Occupancy Management Contribution to overhead and profits Increase in profit (before tax) = $703 - $650 = $5,700 4,012 $1, $ 985 $ 703 $53

McGraw-Hill/Irwin © 2003 The McGraw-Hill Companies, Inc., All Rights Reserved. Exhibit 14.9 Sales Analysis Based on Selected Sales Territories Sales territory Sales person Barlow Burrows White Finch Brown Roberts Macini (1) Company sales 1999 $552, , , , , , ,592 (2) Sales quota 1999 $585, , , , , , ,783 (3) Overage, underage -$32, , ,226 -9, , , ,191 (4) % of potential performance 94%

McGraw-Hill/Irwin © 2003 The McGraw-Hill Companies, Inc., All Rights Reserved. Exhibit The Contingency Planning Process Identifying critical assumptions about the future Assigning probability of each critical assumption’s being right Rank ordering of critical assumptions Tracking/monitoring of action plan Setting triggers to activate contingency plan Specifying alternative response options