BM-XMike’s Bikes Simulation

Keenen Moreira-LimaWade BordianReece CainCarla Sutton - 201006439

Firm Overview

Financial Results: Sales: $12,300,000Units Sold: 20,000Profit (after tax): $978,538Share Holder Value: $10.94Earnings per Share: $0.979

Costs: Cost of each Bike: $181.15Cost of goods sold: $3,763,000Selling and Distribution Expenses: $2,755,140

Marketing Strategy:High Price, Low Volume

Overall Strategy: High QualityHigh Distribution and branding insports storesHigh Marketing

Price: Retail Price

-Price increased by 11% ($550-$610) from 2010 to 2011- Price increased by 1% ($610-$615) from 2011-2012- Price remains the highest in the industry at $615, higher than industry average of $554

Retail Price2012 % 2011 % 2010 Target$615 1% $610 11% $550 $599 13% $530 -4% $550 $525 5% $500 -9% $550 $490 9% $450 -18% $550 $550 0% $550 0% $550 $550 0% $550 0% $550 $550 0% $550 0% $550

        

$554 5% $530 -4% $550 $550

Public Relations Rating

PR Rating        

Firm 2012 % 2011 % 2010 Target

0.08 -27% 0.11 -31% 0.16

BM-X 0.09 -25% 0.12 -25% 0.16

Hot Wheels 0.1 -23% 0.13 -19% 0.16

MikeBikes 0.16 23% 0.13 -19% 0.16

Sharpe Cycles 0.16 0% 0.16 0% 0.16

Firm5 0.16 0% 0.16 0% 0.16

Firm6 0.16 0% 0.16 0% 0.16

Firm7      

   

0.13 -7% 0.14 -13% 0.16 0.10

BM-X’s PR has decreased significantly over the past two years

Dropping 31% in 2011 and another 27% in 2012

An industry average of 0.13 BM-X is down 0.05 points

This is due to a high marketing strategy and low PR priority

Place

1) your firm’s previous results (e.g. price increased by 20% from $550 per bike to $660)

2) the competition (e.g. price remains the highest in the industry and $50 above the next highest price)

3) industry averages (e.g. the price of $660 is $80 above the industry average price of $580)

4) targets if applicable (e.g. the price of $660 is $60 above the suggested premium price strategy of $600)

5) describe how it (price, promotion or place) is related to sales (e.g. our pricing strategy appears to have a strong, negative correlation to unit sales, that as price rises our unit sales decrease from 20,000 units to 17, 500, especially in comparison)

General Conclusion

Look at the big picture of your firm’s sales performance and based on your analysis, identify the key reasons for your sales.

…

You should prepare a marketing analysis report and have these statements on hand:

Income Statement history with horizontal analysis Market Summary (All Product Details Report) history

including competitor results and incorporating selected consumer information from the Market Research report including target ratings

Selected competitive information from Industry Benchmark Report including relevant industry averages

Q & A Period

Are there any questions?