Part A – Written Assessment
Making a marketing expense budget
Shrub Master Corporation is a growing company, based out of Wollongong NSW, Australia. Shrub Master Equipments specializes in the
manufacturing of a variety of farm & grassland mowing equipment. The growth in the past 8 years has been quite significant because of the
high quality & low maintenance equipment. The
sales targets for the financial year 2010-2011 have been far exceeded.
Shrub Master is now introducing a new range of cordless, silent, electric power driven lawn mowers both for the large & small households.
This is a new field which Shrub Master Equipment is venturing into. The CEO Robin William wants no expense spared for the marketing
campaign, however he also wants an effective campaign wherein each dollar spent gets maximum mileage.
You are the marketing manager of Shrub Master Equipment & have been given the task of making a marketing expense budget. The marketing
campaign will be spread over 6 months wherein a budgetary review will be done after a 3 month period.
In Part B you are required to monitor the budget after the marketing activities have been implemented & make any necessary changes &
In Part C you are required to make a report on the same.
You have thought of the following marketing activities
Mailer distribution campaignin the residential area spreading 6 square Kms.For this you need to design, print & have the mailers
distributed. The designing cost is $550 for a 4 colour mailer which is of the size 7 inches by 5 inches. The printing cost is $350 for a
stack of 800 mailers printed on a glossy paper with a thickness of 110 gsm. You need 1600 mailers for this. Apart from this you will have
to hire 6 boys working 5 hours a day covering 1 sq km each. You intend paying them $10 per hour. You will also have to train them for 2
hours before they start on the first day. These 2 hours will be a paid training. The mailer campaign will be repeated 8 times.
Newspaper Advertising:You intend advertising in the “Daily Herald” which isa leading newspaper. A full page single insert, coloured costs
$9000 & reaches an audience of around 80,000 people. You will have to get a new advertisement designed for this & the designing costs $500.
You intend to have this ad repeated for 5 consecutive Saturdays.
Radio Commercial:You also decide on a 60 second radio commercial on87.9 FM, which is a very popular radio station. The charges for a 60
second commercial are $2000 which will be repeated 8 times in a day at prominent times. You decide to run this radio campaign for 20 days
spaced at regular intervals. The radio station also prepares the ads/jingles & charges $750 per jingle. You think it will be a good idea if
the station prepares the ad.
You have to prepare an individual marketing expense budget for each of the above Marketing expenses & then collate them into a Marketing
Activity Master Budget.
Part B – Written Assessment
Monitoring a marketing budget as per marketing objective / plan
The marketing plan was launched in the rural & suburban areas of Wollongong, generating a lot of activity. Your CEO has given specific
instructions that there should neither be any wastage in the budget nor any corners need to be cut.
So you have been very carefully monitoring the marketing budget whilst the campaign has been going on. The budget / campaign has now been
on for almost 3 months & now it’s the time to look at the Actual vs Budgeted figures for the marketing expenses & take corrective action
for the balance of the 3 months.
You observe the following things while monitoring the marketing plan in action for these 3 months:
– The Shrub Master logo appears quite smudged & unclear on a 7 X 5 sizeof flier. Plus the font was also not quite readable. So you had to
redesign the logo placement & get full colour mailers printed on a 9 X 6 mailer, on a matte type finish. The designing now cost you $600 &
the fliers cost you $900 for a stack of 1500 mailers.
– On one occasion you found that the flier distribution boys were simply sitting
& chatting in a café & on another occasion you found that a whole bunch of fliers were thrown in a trash bin. So you decided that one
of your junior staff members should supervise these boys. You paid your staff member an extra $20/hr for supervision & surprise visits. The
total hours that were spent on this supervision were around 25.
– The mailer campaign was repeated 7 times.
– Your CEO suggested & you repeated the “Daily Herald” advertising for 7consecutive Saturdays.
– As regards to the radio advertising, it was decided to have a popular radioshow host – Michael Brumby, interview your CEO wherein your
CEO would talk about the great things of the new products. This spot was purchased at the rate of $4500 for a 10 min spot. Looking at the
amount of proposed booking for the radio advertising, the radio station decided to give you a discount. The special price for you, now is
$1700 per 60 second ad.
Prepare the Actual ad spent at the end of the 3 month period.
Compare the Actual money spent with the budgeted & provide the variance
(Variance = Budgeted minus Actual. If negative, its U – Unfavourable & if positive, its F – Favourable)
Part C – Written Assessment
– Based on your understanding of Marketing reporting / Marketing reportwriting, prepare & send a report to your CEO Mr Robin Williams
underlining the reasons for the variations in the marketing budget.
– Use & illustrate the required graphs / bar charts to show the fluctuationbetween the budgeted & actual marketing figures for each of the