Agency Executive Memo Assignment
Here is data for your fictional widget company and the top competitor in your widget market:
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Table A:
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YOUR WIDGET COMPANY:
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YOUR TOP WIDGET COMPETITOR:
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Net Sales (2011)
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13,642,500
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28,700,350
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Variable Cost Per Unit Sold
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3.17
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2.74
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Selling Price Per Unit
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12.95
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9.99
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Annual Payroll Costs
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4,134,700
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2,870,350
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Annual IMC Expenditures
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5,600,000
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5,600,000
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Net Profit
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3,410,625
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18,655,228
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Advertising Agency Structure
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In-House
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Traditional Agency
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Cost of Advertising
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75 % of Payroll Costs
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15% Commission
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Complete the following table using the data from Table A above:
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YOUR WIDGET COMPANY:
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YOUR TOP WIDGET COMPETITOR:
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Annual Units Sold
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IMC Expenditures as a percent of Sales
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Cost of Agency (In $'s and %)
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Net Profit as % of Sales
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Based on the data you calculated above:
If your competitor expects to increase their IMC spending by 10% and you match this spending, what percent of sales would your IMC expenditures represent (using 2011 revenue)? _________.
If you lowered your price by $3.00, how many units at this price would you need to sell to make up for lost revenue (based on 2011) revenue? ________________________________________.
In 2012, you expect revenues to increase by 6%. You have been directed to budget for IMC expenditures based on a "percent of sales" model with 8% of sales as your budget. What will your expenditures for IMC be in 2012 and what change (in terms of percent) is this from 2011?
Based on data, which company has the best agency structure? Explain your answer on back.