ASSESSMENT CHECKLIST Student Name: Assessor Name: College: = Ol COMPETENT O NOT YET COMPETENT © CHECKLIST ASSIGNMENT O DISCUSSION O OBSERVATION (DEMONSTRATION [1 = ATTENDANCE. QO OTHER: __ . Comments: | have received assessment feedback on (date). Student Signature: Assessor Signatur Student Assessment Receipt Student Name: = Assessor Name: Date: - a marketing audit _Assessment Task 4 BSBMKG515A Conduct a marketing audit Marketing plan review Submission details Candidate's Name | Phone No. - ‘Assessor's Name | Phone No. Z ‘Assessment Site a ‘Assessment Date/s Time/s The Assessment Task is due on the date specified by your assessor. Any variations to this artangement must be approved in writing by your assessor. Submit this document with any required evidence attached. See specifications below for details. Performance objective For this assessment candidates are required to review a provided case study marketing plan and design a plan to audit the marketing activities of the organisation Assessment description In this Assessment Task, you are required to prepare for a marketing audit by developing a plan outlining how an internal and external audit can be conducted within the case study organisation. You will need to review the case study marketing plan provided with this assessment, and describe a pian that outlines the scope, approaches, and timelines for the audits. You will need to clearly identity the type of marketing audit and format to be used in conducting the audit and collecting information. ‘© 2040 Innovation and Business industry Skills Council Ltd Page 1 of 26Assessment Task 4. BSBMKG515A Conduct a marketing audit Procedure 4. Using the case study information provided to you, complete the following steps by providing dot-point written information to describe: a the purpose of the marketing audit, including details about micro and macro factors that may affect the marketing operations the scope of the marketing audit that is required the methodology required to be used in conducting the audit and when the audit could occur for the organisation the participants to be involved in the conduct of the audit and what their involvement would require (their role) the main characteristics of the marketing audit and how they meet the audit. priorities for the organisation ‘the format of and the main elements to be included in the marketing audit the form of marketing audit that best meets the requirements of the marketing plan. Specifications You must provide: ‘¢ a completed marketing plan review, with written information as outlined above Your assessor will be looking for ‘* evidence that you analysed and identified the needs of the case study © evidence that you have analysed the marketing activities of the organisation. Distance-based learners ‘© Complete assessment as per instructions. ©2010 innovation and Business industry Skilis Council Ltd Page 2 of 26Assessment Task 4 BSBMKG515A Conduct a marketing audit Case study information Excerpt from letter of appointment Ready-made marketing engages you to conduct a marketing audit on their client, Sarto’s Gourmet Pasta. ‘* The audit is to cover macro and micro environmental factors, and the internal marketing operations including the marketing organisation, systems and productivity. © Sarto’s will make available existing research data, internal sales data and details of their supply chain logistics. Your audit is to research the Graceville trading area and its place in the wider Australian community, while specifically targeting the pasta restaurant trade. ‘© Priority of the audit is to uncover the key factors that have inhibited the client's ability to achieve the objectives of the market pian. ‘© The audit is to make findings in relation to the marketing plan, culminating in a report that compares the marketing plan assumptions with actual findings. It is, expected that the report will follow the outline of the marketing plan. Meeting with Rose Ready of Ready-Made Marketing You met with the owner of Ready-Made Marketing, Rose Ready, who explained that their client had agreed to the marketing audit but wanted an external person, like you, to conduct it, so that all points of view could be canvassed from an independent perspective to minimise the chance for subjectivity. Rose explained that Sarto's has not achieved the anticipated business objectives, and the hope is that your audit will uncover why this has happened by investigating the macro and micro environmental factors affecting the business, as well as the internal and external influences. The timing of the audit is right in fitting in with the planning cycle and the availability of relevant data, Rose stressed that they were looking for a variety of methodologies to be used in the marketing audit including one-on-one interviews with the Key participants, use of customer focus groups that she could facilitate and research of data available for market research firms and government agencies. To assist you with the marketing audit, Rose gave you a copy of the marketing plan and provided the following research data for you to use in your report: ‘* Australian Bureau of Statistics data ‘¢ IBSA World market research © Australian Treasury reports. Rose also outlined the key participants, apart from hers audit process. These included: If, that could be involved in the ‘= Mario Sarto ~ owner, who could provide reasons behind the decisions and directions given ‘© 2010 Innovation and Business Industry Skil Council Ltd Pago 3 of 26Assessment Task 4 BSBMKG515A Conduct a marketing audit * Eric Yeung - accountant, who could provide financial data on costings and profitability * Adriana Como - sales and promotions, who could help with the internal operational problems with the marketing process. (© 2010 Innovation and Business Industry Skills Counall Lid Page 4 of 26Assessment Task 1 BSBMKG515A Conduct a marketing audit Marketing Plan Sarto’s Gourmet Pasta December 2008 Table of Contents 4.0 Executive Summary, 2.0 Situation Analysis. 2.4. Market Summary. 2.2. SWOT Analysis, 2.3 Competition, o old 2. Service Offering un 3 2.5 Keys to Success.. 14 3.0 Marketing Strategy... 16 esl terete erent 16 3.2 Matketing Objectives wenn sens 16 3.3 Financial Objectives..cnnnenen 16 3.4 Target Marketing. 16 3.5 Positioning, eed) 3.6 Strategy Pyramids.. sessed 3.7 Marketing Mix. 18 3.8 Marketing Research .. 19 4.0 Financials, Budgets, and Forecasts...u..unnmnrnne svmnnnnnnnnnnnnsen BL 4.1 Break-even Analysi§.nnn Dh 4.2 Sales Forecast oD 4.3 Expense Forecast. lee ee renter ee eae 27) 5.0 Controls. 25 5.1 Implementation kmstones. 25 5.2 Marketing Organisation. seen 26 5.3 Contingency Planning. 26 “©2010 Innovation and Business Industry Skills Council Li Page 6 of 26Assessment Task 4 BSBMKG515A Conduct a marketing audit 1.0 Executive Summary Sarto’s Gourmet Pasta will be the leading gourmet pasta restaurant in Graceville, leveraging the rapidly developing consumer demand for pasta and a growing customer base. The signature line of innovative, premium, pasta dishes include pesto with smoked salmon, pancetta and peas linguini in an alfredo sauce, and fresh mussels and clams in a marinara sauce. Sarto's Gourmet Pasta also serves distinct desserts and beverages including alcohol. Sarto’s Gourmet Pasta will reinvent the sit-down and home-delivery pasta experience for individuals and families, with high discretionary income by selling high quality, innovative exotic products at a reasonable price, designing tasteful, convenient locations, and providing industry-benchmark customer service. In order to grow ata rate consistent with our objectives, Sarto's is offering an additional $500,000 in equity. Existing members will be given the first option to subscribe to the additional equity to allow each of them to maintain their percentage of ownership, The portion not subscribed by existing members will be available for prospective new investors. Note: This marketing plan has been prepared for Trans-Australian Financiers by M. Sarto in conjunction with Ready-Made Marketing, as part of an application for finance. Ready-Made Marketing have recommended a marketing audit be done each year to assess the effectiveness and achievements of the plan, and make adjustments where required. @ 2040 Innovation and Business industry Skilis Council Ltd Page 6 of 26Assessment Task 1. BSBMKG515A Conduct a marketing audit ‘© 2010 Innovation and Business Industy Skils Council Ltd Page 7 of 26Assessment Task 4 BSBMKG515A Conduct a marketing audit 2.0 Situation Analysis Sarto’s Gourmet Pasta is close to entering their third year of operation. The restaurant has been well received, and marketing is now critical to its continued success and future profitability. The store offers an extensive offering of gourmet pastas. The basic market need Is to offer individuals, families, and take away customers fresh, creative, exotic, attractive, pasta dishes and desserts. Sarto’s uses homemade pasta, organic vegetables, and premium meats and cheeses. 2.1 Market Summary Sarto’s Gourmet Pasta possess good information about the market and know a great deal about the common attributes of our most prized and loyal customers, Sarto’s Gourmet Pasta will leverage this information to better understand who is served, their specific needs, and how Sarto’s can better communicate with them. Market Analysis 2.1.1 Market Demographics ‘The profile for Sarto’s Gourmet Pasta's customer consists of the following geographic, demographic, and behaviour factors based on a local Chamber of Commerce report: * Overview Graceville: © Large % of families. © Area growing at 10% per year. © Household income — increasing steadily. ©. Regional distribution — Graceville growing faster that the city and state at 7% © Geographic: © Our immediate geographic target is the area of Graceville with a population of 130,000. © A.30 km geographic area is in need of our services. © The total targeted population is estimated at 46,000. ‘© Demographics: © Male and female. © Ages 25-50, this is the segment that makes up 53% of the Graceville market, according to the Graceville Chamber of Commerce. © Young professionals who live close to the location. © Have attended secondary and have further education. (© An income over $60,000. ‘© 2040 Innovation and Business Industry Skills Council [ta Page 8 of 26Assessment Task 1 BSBMKG515A Conduct a marketing audit © Eat out several times a week. © Tend to patronise higher quality restaurants. © Behaviour factors: © Enjoy a high quality meal without the mess of making it themselves, © There is value attributed to the appearance or presentation of food, 2.1.2 Market Needs Sarto’s Gourmet Pasta is providing its customers with a wide selection of high-quality pasta dishes that are unique and pleasing in presentation and utilises top-shelf ingredients. Sarto’s, Gourmet Pasta seeks to fulfil the following benefits that are important to their customers. Selection ~ A wide choice of pasta options. © Accessibility ~The patron can gain access to the restaurant with minimal waits and can choose the option of dine in or take out away. There is a planned ‘Park ‘n Ride’ to be built adjacent to the property providing parking for patrons at night. © Customer service ~ The patron will be impressed with the level of attention that they receive. © Competitive pricing ~ All products/services will be competitively priced relative to comparable high-end pasta/Italian restaurants. Above all, Sarto’s believes that quality tasting food, an exotic assortment and range of pastas, in a family-based dine-in environment is the key to our customer's needs and wants, 2.1.3 Market Trends ‘The market trend for restaurants is headed toward a more sophisticated customer. The restaurant patron today relative to yesterday is more sophisticated in a number of different ways. ‘© Food quality ~The preference for high-quality ingredients is increasing as customers are learning to appreciate the qualitative differences. ‘* Presentation/appearance — As presentation of an element of the culinary experience becomes more pervasive, patrons are learning to appreciate this aspect of the industry. © Selection ~ People are demanding a larger selection of foods, they are no longer accepting a limited menu, The reason for this trend is that within the last couple of years the restaurant offerings have increased, providing customers with new choices. Restaurant patrons no longer need to accept a limited number of options. With more choices, patrons have become more sophisticated, This trend is intuitive as you can observe a more sophisticated restaurant patron in larger city markets such as Sydney or Melbourne where there are more choices available Sarto’s strongly believe that customers are more interested in exotic taste than any other issue. This will be why they shop with us and become loyal patrons. ‘© 2010 Innovation and Business Industry Skills Council Ltd = Page of 26‘Assessment Task 4 BSBMKG515A Conduct a marketing audit 2.1.4 Market Growth In 2008, the global pasta market reached $10 billion dollars. Pasta sales are estimated to grow by at least 10% for the next few years. This growth can be attributed to several different factors. While not all pasta is ‘good for you’, particularly the cream-based sauces, pasta can be very tasty. Sarto’s sees no real substitute for what it provides ~ ‘Impossible to substitute this taste and offer’, according to Sarto's owner and founder, M. Sarto. Another variable that is contributing to market growth is an increase in the number of hours our demographic is working, Over the last five years the number of hours spent at work of our archetype customer has significantly increased. As the numiber of work hours increases, there is a high correlation of people that eat out at restaurants. This is intuitively explained by the fact that with a limited number of hours available each day, people have less time to prepare their meals and eating out is one way to maximise their time. 2.1.5 Economy Based on economic forecasts, Sarto's Gourmet Pasta assume that interest rates are coming down and that this reduction will create more disposable income and more money available for families to eat out. In terms of available credit, Sarto's assumes that this will not change in the foreseeable future and will not be a threat to the potential sales. The same assumption is made about employment levels, where Sarto’s assumes that unemployment levels remain the same at 5.1%, 2.1.6 Political From research carried out, Sarto’s identify that the government focus and emphasis in future legislative direction will be about ‘work/life balance’, which Sarto’s see a positive for thelr business model. Sarto's, as a business operating in Australia, will abide by the law in all its dealings and comply with legislation that impacts on its business activities. 2.2 SWOT Analysis ‘The following SWOT analysis captures the key strengths and weaknesses within the company, and describes the opportunities and threats facing Sarto’s Gourmet Pasta. 2.2.1 Strengths Strong relationships with vendors that offer high-quality ingredients and fast/frequent delivery schedules. * Excellent staff who are highly skilled at food preparation. © Great retail space that is bright, clean, and located in an upscale mall, suburban neighbourhood, or urban retail district. * High customer loyalty among repeat customers. © High-quality food offerings that exceed competitors offerings in quality, creativity and presentation, '* Ready supply of organic food in the area not like other states, “© 2010 Innovation and Business Industry Skills Council Lid Page 10 of 26Assessment Task 1 BSBMKG515A Conduct a marketing audit 2.2.2 Weaknesses * Sarto’s name lacks brand equity. ‘© Alimited marketing budget to develop brand awareness. ‘© The struggle to continually appear to be cutting edge. 2.2.3 Opportunities ‘© Growing market with a significant percentage of the target market still not aware that Sarto’s Gourmet Pasta exists. ‘© Increasing sales opportunities in family business. Inthe expansion, Sarto’s will have the ability to spread overhead over multiple revenue centres. Sarto’s will be able to spread the management overhead costs among the multiple stores, decreasing the fixed costs per store. 2.2.4 Threats ‘© Competition from local restaurants that respond to Sarto’s Gourmet Pasta’s exotic, offerings. ‘© Gourmet pasta restaurant chains found in other markets coming to Graceville ‘© Aslump in the economy reducing customer's disposable income spent on eating out. 2.3 Competition National Competition © Pasta Buzz: offers consumers their choice of noodles, sauces, and ingredients, allowing the customer to assemble their dish as they wish. Food quality is average. © Pasta Bite: has a limited selection but the dishes are assembled with high-quality Ingredients. The price point is high, but the food is quite good. © Pasta Mia: offers pasta that is reasonably fresh, reasonably innovative and at a lower price point. The company was sold a few years ago, and consequently the direction of management has been stagnant lately and has resulted in excessive employee turnover. © Verdi Pasta: has medium-priced pasta dishes that use average ingredients, no creativity, and less than average store atmosphere. Sarto’s is not sure how this company has been able to grow in size as their whole product is mediocre at best. It is Sarto’s belief that the existing unwritten code of business activity, where each chain stays within their founding geographic market place, will remain in the foreseeable future. “@ 2040 Innovation and Business industry Skills Council Lid Page 11 of 26Assessment Task 4 BSBMKG545A Conduct a marketing audit Local Competition ‘Stella's: This is an upscale Italian restaurant that has a limited selection of pasta dishes, Although the selection is limited and pricey, the dishes are quite good, © Peri Pasta: An Italian restaurant with a decent pasta selection, however quality is inconsistent, * Niccolo: An upscale restaurant with a large wine selection and good salads. Everything else is mediocre at best and over-priced. Service can often be poor. Sarto’s do not see the competitors changing their marketing strategy or product offer in the foreseeable future Growth and Share Competitor | Price] Growth Rate| Market Share | Stella's $25) 8%| 16% | Peri Pasta $19 5% 10%| I Niccolo $22| 7% 12%| | Average $22.00 1% 13%| Total 38% Growth and Share Analysis Potential Customers Market Analysis Growth} 2009] 2010] 2011] 2012] 2013, Individuals 6%] 42,000| 42,720] 13,483) 14,202| 45,150 Take Away 10%] 9,000] 10,890] 14,979| 13,177 Family 12%| 25,000| 28,000| 31,360| 35,123[ 39,338 Total 9.27% 46,000| 50,620] 55,733] 61,394] 67,665 Individuals Take Away Bl Family {© 30G0 innovation and Business Industy Sis Councl Ltd Page 12 0126Assessment Task 4. BSBMKG545A Conduct a marketing audit 2.4 Service Offering Sarto's has created gourmet pastas that are differentiated and superior to competitors. Customers can taste the quality and freshness of the product in every bite. The following are characteristics of the product. ‘© Sarto’s dough for the pasta is made with Italian semolina flour. ‘* Cheeses are all imported. ‘© Vegetables are organic and fresh with three shipments a week. ‘© Meats are all top-shelf varieties, organic when possible. At Sarto's, food is not a product; the experience of dining is a service. Sarto’s prides themselves on providing service that is on par with fine dining. Sarto’s will ensure that all aspects that are involved in the delivery of satisfaction to the customer will work using an integrated approach. At a Glance ~ The Prototype Sarto’s Store: * Location: an upscale mall, suburban neighbourhood, or urban retail district. Design: bright and clean. © Size: 110-160 m’. + Employees: 7-10 fulltime plus casuals # Seating: 35-45 © Types of transactions: 80% dine in, 20% take away. Individuals Take Away Family © 2040 innovation and Business industry Skills Council Lid - Page 13 of 26Assessment Task 4 BSBMKG515A Conduct a marketing audit 2.5 Keys to Success Location, Location, Location. Sarto’s site selection criteria are critical to success. Jeff Hardy, former director of Real Estate, Coffee Club, helped us identify the following site selection criteria, «Daytime and evening populations. © Shopping patterns. © Carcounts, © Household income levels 2.6 Critical Issues Sarto's Gourmet Pasta is still in the speculative stage as a franchise concept with one store starting as the prototype. Its critical issues are the following, © Continue to take a modest fiscal approach; expand at a reasonable rate, not for the sake of expansion in itself, but because it is economically wise to, ‘© Use of the phone ordering system to underpin the direct selling activities in take away food. individuals Take Away Family 2009-2010 201120122013 ‘© 2010 Innovation and Business Industry Skilis Council Ltd Page 14 of 26Assessment Task 4 BSBMKG545A Conduct a marketing audit © 2040 innovation and Business industry Skilis Council Lid Page 15 of 26Assessment Task 4 BSBMKG515A Conduct a marketing audit 3.0 Marketing Strategy Sarto’s advertising budget is very limited, so the advertising program is simple. Sarto’s will do direct mail and local advertising, with inserts in the BMag likely to be the most successful of the campaigns Lastly, Sarto's will leverage personal relationships to get articles of Sarto’s in the BMag. Previous friends who have had their restaurant featured in the BMag have seen a dramatic increase of sales immediately after the article was published in the BMag. 3.1 Mission Sarto’s Gourmet Pasta’s mission is to provide families with the finest pasta meal and dining experience. We exist to attract and maintain customers. When we adhere to this maxim, everything else will fll into place. Our services will exceed the expectations of our customers. 3.2 Marketing Objectives 1. Maintain positive, steady, growth each month. 2. Generate atleast $45,000 in sales per month 3. Experience an increase in new customers who are turned into long-term customers. 4, Realise a growth strategy of one store per year. 3.3 Financial Objectives 1. A double-digit growth rate for each future year. 2. Reduce the overhead per store through disciplined growth. 3. Continue to decrease the variable costs associated with food production. ‘3.4 Target Marketing ‘The market can be segmented into three target populations: Individuals: people that dine in by themselves. ‘© Families: a group of people, either friends or a group of nuclear relatives dining together. Take out: people that prefer to eat Sarto’s food in their home or at a different location than the actual restaurant, {© 2010 innovation and Business industry Skills Counc Lid Page 16 of 26Assessment Task 4. BSBMKG515A Conduct a marketing audit ‘The Sarto’s customers are hungry individuals between the ages of 25 and 50, making up 53% of Graceville (Graceville Chamber of Commerce). Age is not the most defined demographic of this customer base; all age groups enjoy pasta. The most defined characteristic of the target market is income. Gourmet pasta stores have been very successful in high rent, mixed-use urban areas. These areas have a large day and night population consisting of business people and families who have household disposable incomes over $40,000. Combining several key demographic factors, Sarto's arrives at a profile of the primary customer as follows: ‘© Sophisticated families who live nearby. ‘* Young professionals who work close to the location. ‘© Shoppers who patronise the high rent stores. 3.5 Positioning Sarto’s Gourmet Pasta will position itself as a reasonably priced, upscale, gourmet pasta restaurant. Graceville consumers who appreciate high-quality food will recognise the value and unique offerings of Sarto’s Gourmet Pasta. Patrons will include singles and families, ages, 25-50. Sarto’s Gourmet Pasta positioning will leverage their competitive edge: ‘© Product. The product will have the freshest ingredients including homemade pasta, imported cheeses, organic vegetables, and top-shelf meats. The product will also be developed to enhance presentation, everything will be aesthetically pleasing. ‘* Service, Santo’s will only employ experienced cooking staff who can create meals that customers will find outstanding to the taste. By offering a superior product, Sarto’s will excel relative to the compet 3.6 Strategy Pyramids The single objective is to position Sarto’s as the premier gourmet pasta restaurant in the Graceville area, commanding a majority of the market share within five years. The marketing strategy will seek to first create customer awareness regarding their services offered, develop that customer base, and work toward building customer loyalty and referrals. The message that Sarto’s will seek to communicate is that Sarto's offers the freshest, most creative, reasonably priced, gourmet pasta in Graceville, This message will be communicated through a variety of methods. The first will be direct mail The direct mail campaign will be a way to communicate directly with the consumer. Sarto’s will also use ads and inserts in the BMag. This will be particularly effective because the BMag is a popular local paper that is consulted when people ate looking for things to do in Graceville “©2010 innovation and Business industry Skils CounciiLid Page 17 of 26Assessment Task 4 BSBMKG515A Conduct a marketing audit ‘The last method for communicating Sarto’s message is through a grassroots PR campaign, This campaign will leverage networking relationships with people on staff of the BMag to get a couple of articles written about Sarto’s. One will be from the business point of view, talking is likely to be run in the business section. The second article will be a food review. In speaking with many different retailers and restaurateurs, significant increases of traffic followed articles in the about the opening of the restaurant and the people behind the venture. Thi IMiag. Because of this level of effectiveness and low/zero cost, Sarto’s will work hard to get press in the BMag. Sarto’s also believe that the local patrons far prefer to receive information from the restaurant via fiyers in the letterbox. 3.7 Marketing Mix Sarto's marketing mix is comprised of these following approaches to pricing, distribution, advertising and promotion, and customer service, © Pricing ~Sarto’s pricing scheme is that the product cost is 35% of the total retail price. ‘* Distribution ~ Sarto’s food will be distributed through a take away model where customers can phone in their order and come to the restaurant to pick it up, come into the restaurant, place the take out order and wait for it to be completed, or come in and dine at the restaurant. ‘+ Advertising and promotion ~ The most successful advertising will be adverts and Inserts in the Bag as well as a PR campaign of informational articles and reviews also within the 8iMag. Promotions will take the form of in restaurant entertainment and ‘free meal’ giveaways. Heavy emphasis on promoting the brand and not just advertising products. ‘© Customer service ~ Sarto's philosophy is that whatever needs to be done to make the customer happy must occur, this investment will pay off with a fiercely loyal customer base who is extremely vocal to their friends with referrals 3.8 Product development It is envisaged that new products will be developed on a regular basis in thine with menu. changes which is targeted at every three months. The plan for product testing is to offer ‘free meals’ to regular customers, staff and their families. By getting feedback from these people, changes can be made or products ‘canned’ so that only tested and proven products make it onto the menu list. © 2010 Innovation and Business Industry Skis Counail Lid Page 18 of 26Assessment Task 1. BSBMKG5115A Conduct a marketing audit 3.9 Marketing Research During the initial phases of the marketing plan development, several focus groups were held to gain insight into a variety of patrons of restaurants. These focus groups provided useful insight into the decisions, and decision making processes, of consumers. ‘An additional source of market research that is dynamic is a feedback mechanism based on a suggestion card system. The suggestion card system has several statements that patrons are asked to rate in terms of a given scale. There are also several open ended questions that allow the customer to freely offer constructive criticism or praise. Sarto's will work hard to implement reasonable suggestions in order to improve their service offerings as well as show their commitment to the customer that their suggestions are valued The last source of market research is competitive analysis/appreciation. Sarto’s will continually patronise local restaurants for two reasons. The first is for competitive analysis, providing Sarto’s with timely information regarding other restaurant's service offering. The second reason is that local business owners, particularly restaurant owners, are often part of an informal fraternal organisation where they support each other's business. ‘Access to ongoing market research will be achieved via the publications from the Restaurant ‘Association which Sarto’s has become a member of recently. ‘©2010 Innovation and Business Industry Skils Council Ltd Page 19 of 26Assessment Task 4 BSBMKG545A Conduct a marketing audit © 2010 Innovation and Business Industry Skils Councl Lid Page 20 of 36Assessment Task 4 BSBMKG515A Conduct a marketing audit 4.0 Financials, Budgets, and Forecasts This section will offer a financial overview of Sarto’s Gourmet Pasta as it relates to the marketing activities. Sarto’s will address Break-even Analysis, sales forecasts, expense forecasts, and how those link to the marketing strategy. 4.1 Break-even Analysis The break-even analysis indicates that $45,000 will be needed in monthly revenue to reach the break-even point. | Break-even Analysis | Sales 35000} 40000) 45000] 50000} 55000} Fixed Costs 25650} 25650| 25650| 25650 25650} Variable Costs 15050) 17200) 19350] 21500} 23650) Total Cost 40700) 42850) 45000} 47150| 49300] Profit -5700} -2850| 0} 2850} 5700} Variable Costs 43% 43% 43% 43%| 43% 4.2 Sales Forecast ‘The first year will be used to get the restaurant up and running. By year two things will get busier. Sales will gradually increase with profitability being reached by the beginning of year two. ‘© 2040 Innovation and Business Indusiry Skilis Council Ltd Page 21 of 26Assessment Task 4. BSBMKG515A Conduct a marketing audit Sales Forecast 900,000 800,000 700,000 600,000 500,000 400,000 300,000 200,000 100,000 Total Sales Sales Forecast 2009 2010 2014 Sales Individuals 120,000 180,000 198,000 Families 450,000 195,000 292,500 Take Away 180,000 216,000 324,000 Total Sales 450,000 591,000 814,500 35% 31%! 38%) Direct Cost of Sales Individuals 42,000, 63,000 69,300) Families 52,500 68,250 102,375 Take Away 63,000 75,600 113,400 ‘Subtotal Direct Cost of Sales 157,500 206,850 285,075 Gross Profit 292,500 384,150 529,425 Gross Profit % 65% 65%| 65% 4.3 Expense Forecast Marketing expenses are to be budgeted so that they are ramped up in the first year. Restaurants typically have increased business in Autumn. This generally occurs because during the summer, when the weather is nice and it does not get dark until late, people tend to eat out less. ‘© 2010 Innovation and Business Industry Skills Counell Ltd Page 22 of 26Assessment Task 1 BSBMKG515A Conduct a marketing audit Marketing Expense Budget Marketing Budget Expense 2009 2040 2014 Direct mail $6,000| $5,605 $5,421 Bmag ads $11,704) $12,455 $12,047 Promotions $7,022 $7,473 $7,228 Total Sales and TT l i Marketing Expenses $24,726) $25,533 $24,696 Percent of Sales 5.49%, 4.32% 3.03% Ongoing sales forecasting will be to use the services of Ready-Made Marketing who will advise on all aspects of the marketing function that Sarto’s will be engaged with. Ready- Made Marketing will also be given access to the marketing cost data so that they can periodically examine and validate marketing costs in line with industry benchmarks. Profitability outcomes budget Profitability outcomes [Average Price | Gross Profit %| Pasta $ 22.00 55% Beverages $ 6.00 70% Overall 65%) ‘© 2010 Innovation and Business Industry Skis Council Lid Page 23 of 26Assessment Task 4 BSBMKG515A Conduct a marketing audit “© 2010 innovation and Business Industry Skils Counéll ta Page 24 of 26Assessment Task 4 BSBMKG515A Conduct a marketing audit 5.0 Controls The purpose of Sarto’s Gourmet Pasta’s marketing plan is to serve as a guide for the organisation. 5.1 Implementation Milestones ‘The following milestones identify the key marketing programs. Itis important to accomplish each one on time, and on budget. Milestones | Advertising Start Date | EndDate | Budget | Manager _| Department | Marketing plan | 1/01/2003 | 2/01/2009. | $0 Mario Department completion | Banner ad syo2/2003 | 4/01/2009 | $3,754 | Mario Department ‘campaign #1 Banner ad 4/10/2008 | 1/01/2009 | $4,900 | Mario Department campaign #2 } Total Advertising $8,654 Budget | PR Start Date | EndDate | Budget | Manager _| Department | Other $0 Other | $0 Total PR Budget $0 Direct Marketing | Start Date | EndDate | Budget | Manager _| Department Direct mail 1/10/2009 | 1/04/2008 | $1,689 | Mario Department campaign #1 | - Insert campaign #1 | 1/10/2009 | 1/04/2009 | $2,252 | Mario Department ect mai ayso/2o09 | 1/01/2010 | $2,205 | Mario Department campaign #2 Insert campaign #2 | 1/10/2009 | 1/01/2010 | $2,940 | Mario Department Total Direct $9,086 Marketing Budget Totals | $17,740 | © 2040 Innovation and Business Industry Skills Council Ltd Page 25 of 26Assessment Task 1. _BSBMKG5115A Conduct a marketing audit 5.2 Marketing Organisation Mario Sarto, the owner, is primarily responsible for marketing activities and has the authority and responsibility over all company activities that affect customer's satisfaction. This is in addition to his other responsibilities. Ready-made marketing have been engaged to provide marketing services as required, and some outside resources for graphic design work, and creativity are also to be utilised Feedback will come from in-store feedback forms and local customer surveys 5.3 Contingency Planning Difficulties and risks: * Problems generating visibility. © Overly aggressive and debilitating actions by competitors. ‘© An entry into the Graceville market of an already existing, franchised gourmet pasta restaurant, Worst case risks may include: ‘© Determining that the business cannot support itself on an ongoing basis. Having to iquidate equipment or intellectual property to cover liabilities ‘© 2010 Innovation and Business industry Skilis Council Ltd Page 26 of 26Assessment Task 2 BSBMKG515A Conduct a marketing audit Conduct marketing audit Submission details Candidate's Name Phone No. | | assessor's Name 7 : Phone No. [ Assessment site c a ‘Assessment Date/s ; : Time/s The Assessment Task is due on the date specified by your assessor. Any variations to this arrangement must be approved in writing by your assessor. ‘Submit this document with any required evidence attached, See specifications below for details, Performance objective For this assessment candidates are required to conduct an internal and external marketing audit, based on the plan they identified in Assessment Task 1 Assessment description Using the plan for the organisation developed in Assessment Task 4 and the Marketing Plan included with Assessment Task 1, you need to identify relevant criterion for internal and external marketing audits, conduct the audits, and collate the information collected in light of the audit requirements, Note: ‘Excerpt from Letter of Appointment is different to that found in Assessment. Task 1. {©3010 Innovation and Business industry Skils Counc Ltd Pageio6Assessment Task 2 BSBMKG515A Conduct a marketing audit Procedure Using the case study information provided to you, complete the following steps by providing written information to: 4. Conduct an external audit by describing in both qualitative and quantitative terms. the criteria to be used in the external marketing audit, including: a, external macro-environmental factors that meet audit requirements. including: i. economic factors demographic factors ili, technological factors iv. political/legal factors b. external micro-environmental factors that meet audit requirements, including: i, market characteristics customer needs iii, competitor factors. 2. Conduct an internal audit, a. Identity the criteria to be used in the internal marketing audit, including: existing research data; internal sales data; supply chain management and logistics. ». Describe the organisation conducting the marketing in terms of functional efficiency and internal interface with the organisation, c. Describe the marketing systems in terms of marketing information, planning and control. 4, Describe the marketing productivity in terms of profitability and cost effectiveness. Specifications You must provide: ‘* a completed marketing audit, with written information as outlined above. Your assessor will be looking for: * evidence that you analysed and Identified the needs of the case study © evidence that you have analysed the marketing activities of the organisation, Distance-based learners '* Complete assessment as per instructions, “© 2010 Innovation and Business Industry Skills Council Ltd Page 2 of 6Assessment Task 2 BSBMKG515A Conduct a marketing audit Case study information Excerpt from letter of appointment Ready made marketing engages you to conduct a marketing audit on their client Sarto's Gourmet Pasta. © You are to use various methodologies to obtain the widest possible view of Sarto’s marketing operations including interviews with the key participants, Excerpt from meeting with Rose Ready of Ready-Made Marketing Rose stressed that they were looking for a variety of methodologies to be used in the marketing audit including one-on-one interviews with the key participants, use of customer focus groups that she could facilitate, and research of data available for market research firms and government agencies. You met with the owner of Ready-Made Marketing, Rose Ready, who explained that their client had agreed to the marketing audit but wanted an external person like you to conduct it so that all points of view could be canvassed from an independent perspective to minimise the chance for subjeotivity. When you asked for an opinion why she thought that the client had not achieved the objectives, Rose replied that there was no one big issue, but that many little factors had an accumulative affect on the overall result. You were wanted to understand the micro-environmental factors impacting on Sarto's. including the buyer and consumer behaviour, competition and market demand and so asked Rose a series of questions. She spoke for a while about Ready-Made Marketing's role with the owner Mario Sarto and the fact that he made all the decisions relating to the marketing, and mostly without any consultation with them. Rose accepted the position but feel that it was not always in the best interests of Sarto's business or its customers. For instance, Mario had rejected the idea of converting the take away ordering system to the new internet based technology. Her own experience was that the staff, while being very competent cooks, were not skilled in telephone sales anyway. Rose was particularly disappointed that Mario did not take up the offer to engage a freelance PR specialist that she introduced to him after Mario's friends at Bmag left the magazine. There was no write up of the business at all for the entire first year. Rose indicated that Mario believed that all the business needed was the delivery of regular flyers in local letterboxes, but according to Rose the feedback from the surveys showed that the majority of customers thought that flyers were mostly junk maill anyway. Rose had hoped to get information from the accountant about marketing costs but that just did not happen. “© 2010 innovation and Business Industry Skills Council Ltd Page 3 of 6Assessment Task 2 BSBMKG515A Conduct a marketing audit Meeting with Mario Sarto and the accountant Mario was happy to meet with you to discuss the business and marketing performance of Sarto's Gourmet Pasta and invited his accountant, Eric Yeung, to the meeting to help with answering some of the financial questions. When asked for an overview of the performance of the business, Mario explained that it has been very difficult from the start. He spoke about the fact that the government had not built the ‘Park & Ride’ parking area as planned and had stopped the project for another year. This Mario said had a big impact on people having access to the restaurant at night. Mario also explained that Stella's, one of his local competitors, had built a large 30 seat ‘outdoor eating area and that it seemed to be full every time he went past and looked in. Also one of the franchise chains, Pasta Bite, had opened up in the adjacent suburb giving the local customers greater options in pasta, All this new activity had put pressure on sales, which lead Mario to drop prices on pasta products. The accountant confirmed what Mario had said with the statement that pasta 108s profit % was only 45%. Mario explained that his strategy to deal with the slow sales was to make the fiyers more single product promotion rather than promoting the band and the assortment offer. As far as Mario was concerned advertising and promotion should be directed at getting next week's sales and nothing more. When Mario spoke about the flyer, Eric said that there had been a huge increase in flyer Unit costs. He believed it was the short print runs and the use of full gloss colour that was ‘causing It. Mario explained that he needed the high gloss to show his pasta to the best. ‘advantage and short print runs because he was offering different ‘specials’ every week. Eric then said that according to the figures, it was the take away business that was really growing not the family groups and family group specials that Mario was targeting with his advertising in Bmag. It seemed that these family sit down specials were bringing down the profitability of the business. Eric explained that he received all the financial information about the business in preparation for Sarto's tax returns. He then produced the actual sales for 2009 which. showed. Segment Budget - 2009 Actual ~ 2 Individuals 120,000 121,000 - Families 150,000 112,000 ; Take away 180,000 203,000 Total ‘450,000 436,000 When you asked about new product development and forecasting sales Mario said that it Was too expensive to get market research done and so just used the accountant’s tax figures and his own ‘gut feel’ to determine the sales forecast. Mario's response to your question about charging different prices for deliveries, was to say that it just good business to charge the rich folk that lived in the gated estate more because they could afford it. (© 2010 Innovation and Business Industry Skills Council Ld Page 4of6Assessment Task 2 BSBMKG515A Conduct a marketing audit Meeting with Adriana Como Adriana was in charge of the sales and promotions for Sarto's but worked as a supervisor in the kitchen as well. You asked her about issues she was facing in terms of the sales and marketing operation. ‘She admitted that her skills and qualifications were more in kitchen management than sales, but Mario had asked her to carry out this function. She said one of the biggest problems was that the phone ordering system was constructed in the kitchen next to the cook with the most responsibility to compile and check every meal. She said it created real logistics problems in dealing with take away orders. When you asked about new product development, she went on to explain that new products were developed based on Mario's assessment of how exotic the new product was or how easy it was to make. Mario felt that testing new products by giving them away was too costly and counterprodustive to increasing sales. Ina comment about accessing research data, she explained that there was plenty of research available in the Restaurant association's monthly magazine, but Mario just left that for magazine for the staff in the lunch room and never consulted it. Another Issue was that there was no real coordination between the timing of the promotional flyers and the preparation in terms of having sufficient stock purchases. Mario and the printer would create a new weekly specials flyer, and sometimes the first she knew about it was when the customer would present at the restaurant ordering one. Research reports In tying to understand the macro factors affecting Sarto’s, you researched the following reports to obtain findings on the demographic, economic, ethical, geographic, political/legal, soctal/cultural, technological influences. You looked through the research reports that Rose Ready had given you to discover the following. Australian Bureau of Statistics (ABS) © ABS statistics on age distribution - Findings are the same as the marketing pian. © ABS statistics on growth rates ~ Findings: Growth in young families with a government incentive on new births and an increase in retirees. ‘¢ ABS statistics on regional distribution of the population ~ Findings: Increasing in the Graceville area but were mostly retirees. ‘ABS statistics on the population size ~ 130,000. Australian Treasury report * Treasury's current interest rates - Findings: Rising incrementally throughout the year. * Treasury's current levels of credit availability ~ Findings: Tightening on credit card limits. Treasury's current unemployment levels ~ Findings: Unemployment falling due to more opportunities created by mothers leaving the workforce. ‘© 2010 innovation and Business Industry Skils Council Lig Page 5 of 6Assessment Task 2 BSBMKG545A Conduct a marketing audit IBSA World ~ Market research 2009 IBSA World industry report on strategies adopted by each of the major competitors ~ Findings: Expansion by the chains into interstate markets - Price war created due to reducing sales and fight for market share. IBSA World industry report material shortages ~ Findings: Drought conditions in most states sees local produce from Queensland being sent to Sydney creating local shortage. IBSA World industry report on market demand - Findings: Steady. IBSA World industry report evolving needs and satisfactions being sought by the buyers in this market - Findings: Growing need for healthy options like salads, and more information on ingredients, IBSA World industry report substitutes for this product ~ Findings: Supermarkets. Introducing a range of prepackaged ‘heat&eat' pasta products. Household Income survey ~ Findings: Steady, no change. Political and legal - Findings: Employees working longer with emphasis an economic growth. New legislation relating to labelling on take-away products delivered to consumers. Focus Group ‘You organised a focus group from the local community and from some of Sarto’s regular customers. The following consensus was reached among the participants. Group want convenience products and more healthy options. Take away and eat at home was the preferred dining option rather than eat out. Pasta products should be designed to be low fat. Tomato-based sauces rather than cream. Customers want to order via the internet and not be stressed out by the phone system with its delays and difficult to understand accents and noise. Customers prefer fewer flyers which they saw as junk mail’, and the flyer should be more Informative about the ingredients and offer a full menu. Some customers questioned the ethics of Sarto's Gourmet Pasta, who charged more for delivery into the neighbouring ‘gated estate’ than to every other home delivery customer. ‘Comment ‘They may be great cooks, but they don't know how to handle telephone sales’. ©2010 innovation and Business Industry Skile Gounell Ltd Page 6076marketing audit Assessment Task 3 BSBMKG515A Conduct Marketing audit report Submission details Candidate's Name Phone No. Assessor'sName | Phone No. - Assessment Site | 7 - | Assessment Date/s Times | | ‘The Assessment Task is due on the date specified by your assessor. Any variations to this arrangement must be approved in writing by your assessor. Submit this document with any required evidence attached. See specifications below for details Performance objective For this assessment candidates are required to assess and analyse information gathered in Assessment Task 2 and present a report describing and auditing marketing activities of the case study organisation. Assessment description Prepare a marketing audit report for the case study organisation you have completed internal and external audits for, using the report format determined in Assessment Task 2. You will need to outline the data you gathered and collated and examine its alignment with the marketing plan. Note: ‘Excerpt from letter of appointment’ is different to that found in Assessment Tasks Land 2. Procedure Using the case study information provided to you, complete the following steps. 4. Write a marketing audit report, ensuring you: a. present information as required by your organisation (this should be negotiated with your assessor) b. report the outcomes and information required by the marketing audit form you used in Assessment Task 2 ©. report against the requirements of the marketing plan provided in Assessment Task 4 2. Present your report to your senior manager (your assessor), at an agreed time and location. “© 2010 Innovation and Business Industry Skills Council Lid "Page Tot?Assessment Task 3 BSBMKG515A Conduct a marketing audit Specifications You must provide: * a completed marketing audit report, with written information as outlined above. Your assessor will be looking for: * evidence that you analysed and identified the needs of the case study ‘* evidence that you have analysed the marketing activities of the organisation and effectively reported on the activities. Distance-based learners ‘* Complete assessment as per instructions, Case study information Excerpt from letter of appointment Ready-made marketing engages you to conduct a marketing audit on their client Sarto's Gourmet Pasta. * You are to map your findings to the headings and assumptions contained in the ‘Marketing Plan - Sarto's Gourmet Pastas - December 2008’ to identify variations. ‘© The audit is to make findings in relation to the marketing plan, culminating in a report that compares the marketing plan assumptions with actual findings. It is expected that the report will follow the outline of the marketing plan. * The body of the report will include: © Situation Analysis, © Marketing Strategy © Financials, Budgets, and Forecasts © Controls. ‘@ 2010 Innovation and Business Industty Skils Coun Lid Page 2012Assessment Task 4 BSBMKG515A Conduct a marketing audit Knowledge test Submission details Candidate's Name Phone No. ‘Assessor's Name. Phone No. ‘Assessment Site ‘Assessment Date/s Time/s ‘The Assessment Task is due on the date specified by your assessor. Any variations to this arrangement must be approved in writing by your assessor. ‘Submit this document with any required evidence attached. See specifications below for details. Performance objective For this assessment candidates are required to answer range of questions about the marketing audit process and factors, Assessment description For this Assessment Task you are required to demonstrate your knowledge of relevant legislation, practices and underpinning knowledge requirements in the nosiness marketing sector. Procedure 1. Review the written questions provided. 2. Provide written responses to the questions, 3. Submit your responses in the agreed timeframe. “ 2010 innovation and Business Industry Skills Council Lid Page Lof7Assessment Task 4 BSBMKG515A Conduct a marketing audit Specifications You must provide: * written responses to all questions provided, Your assessor will be looking for: * evidence that you understand the required legislative requirements ‘* evidence that you understand marketing practices in the business sector. Distance-based learners: This test can be adjusted for distance learners. Options include: Submit test as a report or Conduct an interview. Option 4: Submit test as a report ‘+ No variation of the task is required (templates will be emailed to you). * A follow-up interview may be required (at the discretion of the assessor) * Documentation can be submitted electronically or paper-based, Option 2: Conduct test as an interview This option involves holding an interview with the candidate on Skype or by telephone. * The assessor will schedule a date for the Interview and email required templates to you, ‘© The assessor will make contact with the learner and commence the interview. * After the interview you will complete the templates using supplied information and return them to your assessor within an agreed timeframe. © Supplementary information or a follow-up interview may be required (at the discretion of the assessor). ‘© 2010 Innovation and Business industry Skilis Council Ltd Page 2 of 7Assessment Task 4 BSBMKG515A Conduct a marketing audit Prompt questions . What are the elements of the marketing planning process? 2. For each of the pieces of legislation listed, describe the intent of each and how it could impact on the process of conducting a marketing audit: a. _anti-discrimination legislation b. occupational health and safety ©. privacy laws. ‘© 2040 Innovation and Business Industry Skills Council Ltd Page 3 of 7Assessment Task 4 BSBMKG515A Conduct a marketing audit 3. What is the difference between a business plan and a marketing plan? 4, List three common primary data collection techniques and give a brief description of each. ‘©2010 Innovation and Business Industvy Skis Council id Page 4ofTAssessment Task 4 BSBMKG515A Conduct a marketing audit 5. List three of the six major elements of a marketing audit, and describe what each of these entails. 6. How are environmental factors affecting the business classified, and what is the difference between these two types? ‘@ 2010 Innovation and Business Industry Sklls Council Ltd Page 5 of 7Assessment Task 4 BSBMKG515A Conduct a marketing audit 7. List and describe two external environmental factors 8. Describe how the SWOT analysis can be used in the context of an internal audit? ‘© 2010 innovation and Business Industry Skile Council ta Page 6 of 7Assessment Task 4 BSBMKG515A Conduct a marketing audit ‘©2040 Innovation and Business Industry Sklls Counc id Page 7 of