Surfside: Marketing and Gross Profit Calculation Essay

4508 Words Jun 1st, 2013 19 Pages
Surfside Leisurescapes
This report is consistent with my signed Academic Integrity form on file with the instructor.

May 23, 2013

Surfside Leisurescapes|Page 1

Critical Issues
Surfside Leisurescape (SL) lacks a marketing strategy in place to thrive and to differentiate itself in the competitive hot tub market of Newmarket, which has resulted to a continual decline of sales in the company’s hot tub division.

Situation Analysis
SL’s hot tub division must develop a comprehensive marketing strategy in order to differentiate their products and company brand amongst the competitive hot tub market in Newmarket, Ontario. SL’s lack of marketing strategy has caused the hot tub division to decline in sales by losing potential
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The information pamphlet would have to include the different prices, therapeutic benefits, and product specifications for the Pacific and Jacuzzi

Calculation: (75,100 people * 10% pamphlets sent) = 7510 people X 1% =75.1 X ($8958 avg. price of hot tub) = $672,746 increase in sales

Surfside Leisurescapes|Page 3

product lines. We would target couples between the ages of 35-55 years old that are quality-conscious and dealer/brand loyal. The greatest risk of using this method is that customers that have received a direct mail pamphlet will not buy one single hot tub and the $5,182 advertisement expense will be a sunk cost. The qualitative impacts and risks are shown in Exhibit 11- Qualitative Impacts (Risks) of Options.

Option 3 – Dropping the Pacific Hot Tub Product Line
Several reasons contribute to the potential dropping the Pacific Hot tub line:  Jacuzzi has the greater sales, profit, and quantity sold  The Pacific hot tubs are not standardized, so repairs are more costly  Pacific generates 20% of the gross profit from 10% floor space  Every Pacific hot tub sold is one less Jacuzzi that could’ve been sold. If SL drops the Pacific line, the company will no longer generate sales and profits from this product. Dropping the line, allows SL to focus on advertising and

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