Chapter 4 - Marketing

Case Study: Marketing

Now let's get back to the challenges at Jackson's Department Store. In this segment, you will focus on creating a marketing budget and allocation plan.

Chapter 4: Marketing

Finally, we've arrived at month four. With the framework for a more focused retail strategy in place, the buying department "rests on its ear", still trying to manage the shock of the newly implemented changes. As the "outsider," you begin to notice people's behavior change when you walk into a room. Could they really be talking about you?

For a split second, a thought crosses your mind: maybe you shouldn't leave your lunch in the fridge unattended! "Oh, well." you think to yourself; "That's just the price you'll have to pay for your greatness." (At least, that's what each of us likes to think!)

Much to her credit, Susan looks bright, alert and not the least bit frazzled. In fact, she carries herself with more grace, confidence and determination than you've ever seen before. Wow, it's amazing what success does to a person! Even the smallest wins produce tidal waves of renewed enthusiasm and passion for one's business. That passion keeps us moving forward (and also keeps us from going insane!).

This month's challenge is daunting to the entire team. You must completely overhaul the marketing budget and plan. With respect to advertising, both you and Susan agree the advertisement's "creative" work needs to be done by someone outside the office. Neither of you possesses a creative bone in your collective bodies. In fact, you both exhibit less creative talent than a child needs to win a colouring contest!

Everyone on the Jackson's team agrees that past approaches to marketing have been really haphazard. Typically, ads got placed at the last minute on Fridays, usually only minutes before press time. Likewise, the contents of the ad were thrown together just as haphazardly, with some type of promotional pricing offer. This approach netted little success ... so it has to stop!

Susan spent the weekend looking over last year's marketing costs. She discovered that they totaled $21, 600 out of sales of $1.2 million. That's only 1.8% of sales. Therefore, the team decided to spend much more money on marketing to reposition itself and to attract new customers.

After calls to both retail associations and friends in the business, Susan determined that, in contrast to Jackson's, most junior department stores spent between 2.7% and 3.0% of yearly sales on marketing.

See page 3 in this chapter of "Winning Retail", for industry averages.

After talking with you, Susan agreed to increase the marketing budget to 3% of sales for the upcoming year. Although Jackson's was losing money and couldn't afford the increased expense, she believed the improved and increased marketing would be worth it. Jackson's would somehow find the money, even if it meant a short-term loan from dear old Dad.

Susan's first step? Creating both a 12-month marketing budget and an allocation plan. She acknowledged the importance of planning as a means to ensure the most effective campaign possible. Besides, she knew she wouldn't have time for this each and every month, especially with all the other changes taking place. She thought to herself, "who does?"

Annual Marketing Budget and Allocation Plan

	January			February			March
	1997 Actual	1998 Plan	1998 Actual	1997 Actual	1998 Plan	1998 Actual	1997 Actual	1998 Plan	1998 Actual
Sales	96000	120K		72000	90000		72000	105K
% of year's total	8%	8%		6%	6%		6%	7%
Marketing	1200	3600		2500	2700		0	3150
% of sales	1.3%	3%		3.5%	3%		0	3%
% of year's total	5.5%	8%		11.6%	6%		0	7%

	April			May			June
	1997 Actual	1998 Plan	1998 Actual	1997 Actual	1998 Plan	1998 Actual	1997 Actual	1998 Plan	1998 Actual
Sales	84000	105K		96000	120K		84000	105K
% of year's total	7%	7%		8%	8%		7%	7%
Marketing	1000	3150		2900	3600		2500	3150
% of sales	1.2%	3%		3%	3%		3%	3%
% of year's total	4.6%	7%		13.4%	8%		11.6%	7%

	July			August			September
	1997 Actual	1998 Plan	1998 Actual	1997 Actual	1998 Plan	1998 Actual	1997 Actual	1998 Plan	1998 Actual
Sales	72000	90000		96000	120K		120000	150K
% of year's total	6%	6%		8%	8%		10%	10%
Marketing	2500	2700		0	3600		3000	4500
% of sales	3.5%	3%		0	3%		2.5%	3%
% of year's total	11.6%	6%		0	8%		13.9%	10%

	October			November			December
	1997 Actual	1998 Plan	1998 Actual	1997 Actual	1998 Plan	1998 Actual	1997 Actual	1998 Plan	1998 Actual
Sales	96000	120K		144K	180K		168K	195K
% of year's total	8%	8%		12%	12%		14%	13%
Marketing	0	3600		2000	5400		4000	5850
% of sales	0	3%		1.4%	3%		2.4%	3%
% of year's total	0	8%	&nbp;	9.3%	12%		18.5%	13%

Total Planned Sales $1,500,000
Total Marketing Budget $45,000
3% of Sales

Susan's Notes:

• We've chosen to use a straight-line approach in allocating our marketing funds for each period. As the year progresses, we may need to make some modifications to the monthly allocations. Either way, we will not exceed 3% of total annual sales.

Putting the number crunching exercises behind us, we can decide how to allocate our $45,000 marketing budget. We must all recognize that achieving the targeted sales increase will require a meticulous marketing campaign.

The majority of this campaign will be driven by the first review of the "Major Marketing Events" for the coming year. By planning these events as much as 12 months in advance, the Jackson's team can begin to realize significant benefits:

• They can buy for specific marketing events, allowing them to "shop" for special promotional purchases.



• Suppliers are more likely to work with them on events that are planned well in advance.



• The more time they allow for marketing, the better the creative elements.



• Staff can be prepped well in advance.



• Their time and money well-spent, they will enjoy a professional campaign, rather than a ragged affair.

Major Events Planner

Event	Dates	Product	Creative	Media	Staff	Other
January Clearance Sale	Jan. 4 to 22	Store wide Focus on House wares	Outside assistance	Newspaper($1500)Flyers($1500)	Standard	Source clear-outs in Oct/Nov
Spring Clean -Up	March 10 - 29	Liquidate all old / dead stock	Outside assistance	Newspaper($2000) Flyers($1500)	Special T-shirts	Need liquidate list by Jan. 31
68th Anniversary Sale	August 2 to 14	Women's Casual Children's	Outside assistance	Radio($2000) Flyers($1500)	Thank you dinner	Inquire about roof balloon
Back To School	August 15 to Sept. 10	Youth Children Sportswear	Outside assistance	Radio($1500) Newspaper($1500) Flyers($1500)	Sales Training Special Hats and T-shirts	Inquire about local school promo.
Christmas Wishes	Nov. 20 to Dec. 24	Store wide values	Outside assistance	Newspaper($2000) Flyers($1500)	Sales Training Pre-Xmas Party	Focus on under $20 Get Santa!
Boxing Week	Dec. 26 to 31	Store wide Special buys	Outside assistance	Radio($2000)	Survival Kit (aspirin, insoles, nature music)	Must buy for this week

When compiling the "Major Events Planner," it was hard to decide which media projects Jackson's needed select. Keep in mind that, at this stage, these choices are only tentative. As the year progresses, the store will track (and with a vengeance, I might add!) how the various elements of the marketing campaign are succeeding.

Susan will also track Jackson's sales performance during each individual ad campaign. Several media types may be used simultaneously, so the management group created the "Advertising Check Sheet" (ACS). This tracks where customers come from and which media brought them to Jackson's.

Now, don't worry; no one needs an M.B.A to understand how this process works! But you do need to commit to using your ACS. Without one, you can't successfully track your hard-earned advertising dollars to find out which ones work for you and which don't. Some of those ad dollars may just be circling around in orbit and be of better use in another venue.

Advertising Check Sheet

Dates: ____________________________

	Mon	Tue	Wed	Thur	Fri	Sat	Sun	Total
News-Papers
Radio
Flyers
Yellow Pages
Direct Mail
Email
Referral
RepeatCust.
Other
Total

Whether it was something you said or the fact that you may not look busy enough, Susan just dropped another project on your desk! At moments like these, you cringe and scoff ... just keep telling yourself Susan is (was?) a nice person!

Before Susan can wrap up her Marketing Plan, she needs you to complete the Media Allocation Budget (just wonderful!). It's pretty straightforward, but might require you to find a few more hours in your day to complete. Either way, you'll be fine. Oh, and by the way, Susan's proved her decency and loyalty by completing the first month for you.

Upon arriving at your parked car (with full intentions of leaving office work behind), you notice a nasty little Post-It note (darn!) attached to your window. It reads as follows:

"Don't forget to talk to all of our suppliers about their co-op ad programs. Let's get them to pay as much as possible. The more they pay, the more we can advertise. Also, try to find some time to investigate how we can get more involved in our community. It's great PR.

Susan."

Why did you take this job again? Oh, that's right -- the fun and excitement of it all! Well, once again, good luck!

Media Allocation Budget

	January		February		March
	1997	1998	1997	1998	1997	1998
Newspaper	1,200	1,500
Radio
Flyers		1,500
Direct Mail		0
Email		0
In-store signage		300
Display supplies		300
Salaries (direct)
Total	$1,200	$3,600

	April		May		June
	1997	1998	1997	1998	1997	1998
Newspaper
Radio
Flyers
Direct Mail
Email
In-store signage
Display supplies
Salaries (direct)
Total

	July		August		September
	1997	1998	1997	1998	1997	1998
Newspaper
Radio
Flyers
Direct Mail
Email
In-store signage
Display supplies
Salaries (direct)
Total

	October		November		December
	1997	1998	1997	1998	1997	1998
Newspaper
Radio
Flyers
Direct Mail
Email
In-store signage
Display supplies
Salaries (direct)
Total