6.2.4 Marketing Entries

Login to Capstone.xls and click the Decisions menu. Select Marketing. Use this area to determine each product's Price, Promo Budget, Sales Budget and Sales Forecast.

What's the difference between the Computer Prediction and Your Sales Forecast? The Computer Prediction (in yellow) assumes your competition will not update their product line– not a good assumption. The Computer Prediction however will adjust as you revise your products in R&D, change prices and determine your Accounts Receivable policy. The adjustment, up or down, will give you an idea of the relative effect your decisions will have on product appeal.

The Your Sales Forecast column allows you to enter qualitative sales projections (see “Forecasting”).

The remaining cells display the financial impacts of your decisions:

• Gross Revenue Forecast– Price multiplied by either the Computer Prediction or, if entered, Your Sales Forecast
• Variable Costs– Labor, Material and Inventory Carrying costs subtracted from the Gross Revenue Forecast
• Contribution Margin Forecast– Gross Revenue minus variable costs
• Less Promo & Sales– Contribution Margin Forecast minus the product's Promo Budget and Sales Budget
• Customer and supplier credit policies are set in the Marketing area.

Round 2 of the Rehearsal Simulation covers Marketing decisions.