Craft Marine Case Essay
The alternatives are: (there are several other budgeting methods, but we will not analyze all of them. I am looking for pros and cons in this section) x = multiplied by Advertising expenditures for this budgeting method are guided by how much competitors spend. Who is the competitor? Justify. One of Craft Marine’s competitors is Genmar Holdings. Genmar had sales estimated at 1. 2 billion dollars. It was estimated that Craft’s Marine’s two main competitors spent 0. 53% and 0. 4% respectively.
Calculation: 2001 Sales ($120. 5 million) x expected increase in Sales (1. 15%) = 2002 expected Sales (*$138,575,000) **x competitors % of sales (7%) = 2002 advertising budget (**$ 970,025*) Spend $764,485 using the objective task method Craft Marine’s objectives are to 1) showcase product development activities undertaken in 2001, 2) increase top of mind awareness among boat owners and those likely to become involved in boating, and maintain the sales growth momentum of the previous year.
It is clear that Craft Marine intends to build awareness in it’s new products through boating magazines, dealer catalogs/brochures, and newspaper ads with dealers. Appendix A outlines their 2002 budget in mine with these objectives. Identify the objectives in the case and determine the costs associated with reaching these objectives by examining how much they should spend on boating magazines, dealer catalogs/brochures and cooperative newspaper advertising with dealers. They should make sense with the objectives. Recommend a method and justify your choice.
This budget permits the company to maintain current levels of advertising in national boating magazines and in cooperative newspaper advertising with dealers along with unchanged production costs. The extra capital will fund two separate color ads placed in Sport Illustrated magazines distributed in three regions. These regions will encompass coastal areas. The ads will focus on (CFC)’s introduction of three 20-foot boats made for marine conditions. This budget also allows an increase in dealer catalogues and consumer brochures. See exhibit * for proposed advertising budget.
Problem Identification Statement: Craft Marine must select an advertising plan for 2002, which highlights product development, increases awareness among boat owners, and maintains sales growth of 15%, for their entire customer market. In order to align its budget in parity to competition, Craft Marine will allocate $970,025, consistent with the industry average of . 07% of sales. This will primarily fund the continuation and expansion of past marketing efforts. Additionally, this budget will include significantly higher brochure and catalog expenditures, as well as two experimental advertisements in Sports Illustrated.