MARKSTRAT3 - FIRM U

Marketing Team
Mare Lynn Fitch Gina Blum Brian Fowler Donna Johansen

Prepared for Dr. Glynn Mangold-Mkt. 667 Fall 2000

November 16, 2000

TABLE OF CONTENTS
TOPICS PAGE 1. EXECUTIVE SUMMARY 3 II. III. IV. ANALYSIS OF CURRENT SITUATION 4 KEY ISSUES -SWOT 7 OBJECTIVES 5. MARKETING STRATEGY 10 6. MARKETING ACTION PLANS 13 7. PROJECTED PROFIT AND LOSS STATEMENTS 14 VIII. CONTROLS
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EXECUTIVE SUMMARY
Date: November 16, 2000 To: Dr. Glynn Mangold CC: Mare Lynn Fitch, Gina Blum, Brian Fowler, and Donna Johansen From: Marketing Department for Firm U RE: Marketing Plan- Period 8

The marketing plan for Firm U is to continue to increase market share, sales revenue, and profits in the Sonite market, and to venture into the Vodite market. Our total market share is 40.1 percent in the Sonite market for Period 7. This is a 60 percent increase over the previous four periods and a 100 percent increase for the last seven periods, which are the highest increases of any firm in the industry. The total targeted market share increase is approximately 3.3 percent per period. The targeted increase can be achieved with an increase of over 26 percent in revenues and over 40 percent in sales, which includes both the Sonite and the Vodite markets. With these increases in both market share and sales, profits should significantly rise as well. Firm Us projected increases are based on a market whose growth is in the mature stage of the product life cycle and on the verge of being in the declining stage. A vast portion of the companys profits will be reinvested into the research, development, and promotion of the Vodite brand PVUMM, with a much smaller portion to further modify existing Sonite products. Advertising will taper off for the Sonite products utilizing a harvesting strategy, and will be channeled into the Grand Introduction planned for the Vodite market.

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 The Sonite market is a market with an ever-slowing growth and a saturated product market due to intense competition. The short-term goal for Firm U is to position ourselves to obtain fifty percent market share by capitalizing on our leading established brands and experienced sales force. Profits will increase further due to the decreased advertising expenditures on our cash cows products. The long-range goals for Firm U are to maximize on our position as the leader in the Sonite market and enter the Vodite market. With the potential profits from Vodite revenues, Firm U can strengthen its Sonite market share, firmly establish its place in the Vodite market, and further secure its position as the overall industry leader.

ANALYSIS OF CURRENT MARKET SITUATION

Market Situation
The Sonite market has grown by ninety-four percent since Period 0. In Period 7, the Sonite Markets

volume totaled 1,562,009 units. The Volume Growth Rates are displayed in the table below. It is clear from this exhibit that the market growth has slowed tremendously. This significant declining increase in volume should be considered when making all future Sonite brand decisions.
* Information courtesy of the Markstrat3 Industry Reports. Sn M o ite arket-V lu e o m
P erio d T tal o

The Sonite market is composed of five customer segments. These segments represent different
C an e h g

consumer preferences and purchasing behaviors for the 3,260 of the five firms in Industry 3. The 0 8 brands 0 Buffs, Singles, Professionals, High-Earners, 1 Others1segments5.97% and 9 ,5 6 3 6 1 are significantly different from 2 1 7 ,2 6 ,0 7 8 1 .6 % 5 4 each other as seen below:

3 1 1 ,6 1 ,2 4 8 1 .7 % 2 5 4 1 9 ,4 0 ,2 3 6 6 9 .4 % 1. The Buffs: This consumer group is1,412,866 enthusiastic and% 5 9 3 generally very knowledgeable .2 1 3 ,7 7 ,5 2 4 8 8lie .4 regarding new and available brands.6 Their greatest interests % in the quality and technical 7 1 1 .9 features of the brands they purchase. These1,562,009 should % addressed when producing interests be 8 new brands and modifying existing brands targeted at this segment. The Buffs are currently 9 the smallest Sonite segment, and are0 1 declining in numbers as predicted. However, as

innovators, they still remain important to the success of the Sonite products. The Singles: This consumer group lives alone and appears to be less technically knowledgeable than the Buffs. They are primarily interested in the performance of the brands they purchase. This interest should be a priority when producing new brands and modifying existing brands targeted at this segment. This segment is one of the fastest growing segments in the Sonite market. It is very important to the success of the low-end to mid-end Sonite products.
2.

The Professionals: This consumer group is highly educated and receives elevated incomes in their occupations. They are independent with regards to these occupations, and are
3.

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very involved in social activities. They are primarily interested in the performance and convenience of the brands they purchase, but the social status of a brand is their greatest motivator to purchase. This group has seen a decline in numbers in most recent periods. However, they are very important to the success of the high-end Sonite products. The High-Earners: This consumer group also receives elevated incomes, but they are less educated and retain lower levels of occupational independence than the Professionals. They are most interested in the convenience of the brands they purchase. Although this group has also seen a decline in numbers in recent periods, it is equally important to the success of the high-end Sonite products.
4.

The Others: This group is made up of consumers who do not fit into any of the previous segments. They are currently the largest segment and are forecasted to grow by almost 78 percent in the future. They are most interested in the economy of the Sonite brands. The Others are most important to the success of the low-end Sonite products since this segment makes up over 38 percent of the Sonite market.
5.

In Period 7, the Sonite market is in the late Growth Stage of the Product Life Cycle. Total Market growth has apparently stabilized, and competition for all segments has increased. Careful examination reveals that several brands now mirror one another. This represents the classic brand switchers approach of attempting to steal customers away who are willing to switch brands. Some of the five companies (A, E, I, O, and U) that make up the Sonite Market have become experts in segmentation and positioning, while others are still experimenting. This is evident in the multiple modifications of existing brands and introductions of new brands. The Sonite market is currently represented by twenty-three brands with at least two more expected in the coming periods. Based on sales, the Sonite market is currently free from new entrants and substitute threats. It appears that the Sonite brands have complete control of the marketplace.

Competitive Situation
In Period 7, five firms are manufacturing twenty-three brands and competing within the Sonite

market. No one has ventured into the Vodite market yet. Our Firm, U, currently maintains the highest Unit Market Share with 40.1 percent of the Sonite market. We are followed by Firm E, whose Unit Market Share is 21.7 percent, and Firm O with 14.6 percent. Firms A and I recently experienced tremendous decreases and now have only 12.7 percent and 10.9 percent respectively. Firm E is currently the Market Leader in the Professional (34.6%) segment, while Firm I is the Market Leader in the High-Earners (31.3%) segment. Finally, Firm O is the Market Leader in the Singles (35.1) segment. However, our Firm is closing in on the Singles (29.4%) segment and the Professionals (23.0%) segment. We expect to be the leaders in these segments as well in the coming periods.

Our Firm is currently the Market Leader in two segments: the Buffs (50.1%) and the Others (62.2%).

Our Firm currently maintains the leading shares in all three distribution channels: Specialty Stores,

(37%) Department Stores (46.0%) and Mass Merchandise (53%). The Specialty Stores carry Sonites as a primary product, and offer specialized services. Department Stores handle a wide variety of merchandise and may even have a separate department that carries Sonite brands. The Mass Merchandise Stores carry a large number of brands, of which the Sonites may only be a small
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percentage. The Mass Merchandise stores are the only growing distribution channel with 12,603 stores (454 more stores than Period 6). The following exhibit displays the leaders in several additional market categories:
Categories Stock Price Index Retail Sales Revenues Contribution After Mkting ROI Cumulative ROI U 2236 $198 mil $130,823 $36 mil 2.02 2.71 E 1242 $107 mil $69,355 $23mil 2.03 2.40 A 1121 $63 mil $40,853 $12 mil 1.42 2.47 O 974 $72 mil $46,359 $12 mil 1.39 1.99 I 879 $54 mil $35,930 $19 mil 1.41 2.39

* Information courtesy of the Markstrat3 Industry and Market Studies Reports.

As presented above, our Firm is the Market Leader in five out of the six categories: Stock Price Index, Retail Sales, Revenues, Contribution after Marketing, and Cumulative ROI. Firm E has the largest Period 7 Return on Investment (2.03). In addition to the above figures, our Firm is the leading employer in the Sonite market at this time. We currently maintain a sales force of 260 people. This is followed closely by Firm E, with a sales force of 254. Firm I has 170 sales people, and Firm A maintains a sales force of 151. After a recent cutback, Firm O has the lowest number of sales people (74) in the Sonite market. Reflective of the declining increase in market growth, the competitive nature of the Sonite market has greatly intensified as new brands are introduced and existing brands are continually modified to better target customer preferences.

Macroenvironment Situation
This economic information should be considered when making decisions regarding new and existing brand development: A. For the past four periods, the Gross National Product (GNP) has remained stable at 2 percent. It is expected to maintain this level into the next period. A strong GNP contributes to the success of Sonite products in that consumers in the marketplace have more income to spend. B. In recent periods, inflation climbed from 2 percent to 4 percent. In Period 7, it again fell to 2 percent, and this level is forecasted to remain constant into the next period. Because lower inflation leads to increased purchasing power, the sales levels in the Sonite market should improve in the next period.

Past Brand Performance

Since Period 5, our low-end brand, SUSI, has performed way above our expectations. It has been our most successful brand throughout our management. Sales have increased by as much as 53%. We have now begun to better estimate adequate production levels for this successful brand. SUSI continues to remain the leader of twenty-three Sonite brands to date. Our second most successful brand is SUFF. Since Period 5, this brand has grown as much as 56%. We recently made modifications to reposition SUFF closer to the shifting preferences of the Buffs. Until Period 7, we had expected this brand to continue its successful sales pattern. However, it has

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seen unexpected drops in sales. We attribute this drop to the decline of the Buffs base, as well as the current limited growth of the Sonite market itself. Our SUSU brand has also experienced tremendous sales growth levels. Its primary target is the Singles segment, and since its introduction in Period 5, this brand has grown as much as 60%. As sales levels continue to decline for our competitors who are targeting the Singles, we expect our SUSU sales to increase even further. Our newest brand, SUPR, has made a respectable entrance into the Sonite market. Since its introduction in Period 6, it has grown by 154% to almost 53,000 units. At first we kept advertising levels and sale efforts low to determine its positioning on the Multidimensional Scaling map. Once it was determined that this brand was successfully positioned, we decided to place a greater emphasis on this brand. We expect this brands sales to continue to grow and provide us with the largest unit shares of the Professionals market. Since Period 4, we have experienced tremendous drops in sales in our SULI brand (from 124,173 to 38,917 units). In response to this, we will modify this brand in Period 8. We had previously decided to let this brand simply disappear, but now feel that this would be a mistake. We believe our new modifications aimed at the High-Earners should return this brand to its previous levels of success.

KEY ISSUES-SWOT
Strengths
Our firm currently holds the greatest amount of total market share in the Sonite market. Over the last four periods, we have increased our market share by over 60 percent. We have consistently maintained the highest total retail sales and revenues in comparison to our four major competitors. We continue to have the largest and, we feel, the most experienced sales force in the industry. Our plan to hire and train personnel prior to the introduction of our newest brands has obviously worked to our advantage. Our Firm is currently the Market Leader in two consumer segments: the Buffs and the Others. We also maintain the leading shares in all three distribution channels: Specialty Stores, Department Stores, and Mass Merchandise. Our R&D department has continued to improve. We have built such a solid foundation that our new brand introductions and modifications have done extremely well upon entry into the market. We are confident that our R&D group has gained adequate experience to successfully guide us into a new market in the near future. Our Brand awareness continues to increase, as we devote ample amounts of capital to our advertising.

Weaknesses

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 Throughout our management, we have had difficulty predicting the initial production levels of our new brands, as well as those of some of our declining brands. We must request productions levels more efficiently in order to meet sales requirements and minimize inventory holding costs. The changing preferences of the consumers continues to challenge our firm. We are forced to continually monitor and adjust the Perceptual Objectives to reposition our brands in an attempt to gain additional market share.
We would like to expand into the Vodite market. However, we do not have the necessary capital to

proceed at this time. We must substantially increase our revenues in the next period in order to enter this new market and still remain competitive in the Sonite market.

Opportunities
We have now gained extensive market experience. This has afforded us the opportunity to successfully reposition our brands at poorly targeted segments. As we continue to draw on this advantage, we will achieve a greater market share and higher revenues. In Period 6, we completed a project Feasibility Study for the Vodite market. If our revenues remain stable in the coming periods, we will have the opportunity to complete this R&D project and introduce a brand into the untapped Vodite market. We are able to purchase additional Sonite market studies to better position our brands according to the preferences of our targeted markets. This will provide us with opportunities to further increase our market share.

Threats
Our brand positioning is frequently threatened by the unstable Purchase Intentions of consumers in the Sonite Market. No apparent trends have been identified to date. Competition in the Sonite market remains constant and the ability of our competitors to better project some Ideal Values remains a constant threat to our market share.
Three of the five segments that our firm is targeting are declining in size. In addition, the growth

rates are projected to decrease in all segments but one. This threat requires us to operate under more scrutinized production levels.

OBJECTIVES
Financial Objectives
Continue to maintain the highest Stock Price Index of any Firm in the Sonite market. Achieve a 2436 (base 1000) Stock Price Index in Period 8.

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 Continue to maintain the highest Return on Investment in the Sonite market. Achieve a current ROI of 3.54 and a cumulative ROI of 3.03 in Period 8. Continue to maintain the highest revenue and profit levels in the Sonite market. Increase by 26% and 70% respectively in Period 8.

Marketing Objectives
Dollar Sales: Increase Overall Retail Dollar Sales by 26 % in Period 8. Increase per brand in Period 8: SUSI - 15% SULI - 57% SUFF - 1% SUSU - 27% SUPR - 62% Unit Sales: Increase Overall Unit Sales by 20% in Period 8 Increase per brand in Period 8: SUSI - 15% SULI - 55% SUFF - 1% SUSU - 27% SUPR - 61% Market Share: Increase Overall Market Share by 13% in Period 8 Increase Market share per brand by Period 10: Increase SUSI by 20% to capture 75% of Others Market Increase SULI by 124% to capture 50% of High-Earners Market Stabilize SUFF to maintain 50% of Buffs Market Increase SUSU by 70% to capture 50% of Singles Market Increase SUPR by 117% to capture 50% of Professional Market Distribution Coverage in each Channel: Remain Number One in market share for Specialty, Department, and Mass Merchandise channels (Currently 37%, 46%, and 53% respectively.) Sale Force: Maintain largest sales force in Sonite Market. (Increase overall employee totals to 270 [90 per channel] in Period 8.) Advertising: Continue to allocate approximately 50% of total budget for advertising purposes. Continue to allocate 10% of each brands Advertising Media budget for Advertising Research.

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MARKETING STRATEGY
Target Markets

We now have five brands strategically targeted at each of the five segments of the Sonite market after the completion of our last brand modification in Period 8. The success achieved in our primary focus areas (the Others and the Buffs) along with our aggressive R&D program provided us the confidence to aggressively pursue all segments of the Sonite market.

Our consistent marketing efforts remain with the Others (low-end) and the Buffs (mid-end). The Others make up 56% (24.5/43.8= 56%) of our total market share and the Buffs make up 9% (3.8/43.8= 9%). We currently hold the highest market share based on unit sales in these two segments. Our greatest area of new focus has been the Singles, the second highest growing segment in the Sonite Market. We introduced a brand targeted at this segment in an attempt to steal sales away from the other firms who had previously targeted them. We developed our brand to directly target their Semantics preferences. Our R& D decisions have paid off with sales to the Singles (mid-end) accounting for 22% of our total market share based on unit sales (9.6/43.8 = 22%) after just three periods. Although growth rates are declining for the Professionals and the High-Earners, we feel these will still be a viable source of additional revenue. These two segments account for the majority of our high-end product sales. The above mentioned brand modification was made to more closely satisfy the changing preferences of the High-Earners.

Brand Strategy
Our primary objective for our current brand line is continued differentiation according to the expressed preferences of the customer segments. We strive to develop brands that will best fit these preferences even if the transfer cost is higher than desired. We do not want to develop cheap brands that will damage the reputation of our firm and/or our existing brands. We believe that our strategy is successful, and that Firm U and its brands are experiencing the market results of excellent name brand recognition. One method we have discovered that has allowed for our brand success is the extensive analysis of the segments and their preferences. We have utilized the Semantic Scaling, and especially the Multidimensional Scaling, as a source of insight into the similarities and differences of the five segments, as well as their ever-changing trends. By doing so, we have been better able to position our brands to directly meet the preferences of these segments. We have opted to offer a distinct brand to each targeted consumer segment in hopes of gaining additional market share. We understand that

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there may be some overlapping in the segments who purchase our brands, but this overlapping will simply afford us additional unexpected revenue. The cost-efficiencies and experiences gained by our R&D department will be valuable assets in our endeavor to enter the untapped Vodite market. The following exhibit is a detailed summary of each brand in our portfolio:
Brands SUSI SULI SUFF SUSU SUPR Intro to Mkt. Prior to Period 0 Prior to Period 0 Period 4 Period 5 Period 6 Target Segment Transfer Cost Total Mkt. Share Others $65.00 24.5% High-Earners $180.00 2.50% Buffs $199.00 3.80% Singles $111.00 9.6% Professionals $183.00 3.4% Segment Mkt. Share 62.2% 22.3% 50.1% 29.4% 23.0%

* This information provided prior to Period 8 results. Courtesy of Markstrat3 Market Studies Reports.

1. 2. 3. 4. 5.

SUSI: This brand has been modified twice since its introduction to the market. It is positioned to target the Others segment. This is one of two low-end brands modified to target the consumers who are concerned with the economy of their purchases. It is our best selling brand. SULI: This brand is being modified in Period 8. It is positioned to target the HighEarners segment. Sales have been declining in the last several periods forcing us to redesign its features. Instead of creating a new brand, we decided to modify the existing brand to maintain its name brand advantage. SUFF: This brand was modified in Period 6. Its primary target segment is the Buffs. In Period 8, we used the Perceptual Objectives to make some minor adjustments to the Economy and Convenience positioning of this brand. SUSU: This brand was introduced in Period 5 to target the Singles segment. It is currently our second best selling brand. It has experienced a 56.3% increase in sales from Period 6 to Period 7. We expect this brand to continue to achieve top performance levels as it is more closely aligned with customer preferences than those of our competitors. SUPR: This brand was introduced in Period 6 to target the Professionals segment. We witnessed a phenomenal 154.7% increase in sales from Period 6 to Period 7. We project this brand will achieve top performance levels in the near future as it is more closely aligned with customer preferences than those of our competitors.

Distribution Strategy
We were successful in our previous efforts to obtain the number one position in each of the three distribution channels. We attribute this to our increased product mix and sales force efforts.

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 Our primary logic in hiring so many sales people (270) is to offer brands to the channels as quickly as possible. We also want to differentiate our Firm and our brands by offering better service. We are doing this by assigning fewer stores to each sales person. This allows them more time in each location, and more time means more sales. We will continue to position the efforts of our sales people based on who currently shops at each channel location. We carefully analyze the period shopping habits of each market segment and make sale effort allocations based on this data. The following exhibit offers a visual display of our current Distribution Strategy for Period 8:

Distribution Channel Specialty Stores Department Stores Mass Merchandise

# of Sales People 90 90 90

% of EffortSUSI 19% 49% 79%

% of EffortSULI 21% 19% 2%

% of EffortSUFF 18% 2% 1%

% of EffortSUSU 20% 20% 15%

% of EffortSUPR 22% 10% 3%

* Information courtesy of the Markstrat3 Decision Report for Period 8.

Pricing Strategy
Our primary concern when determining brand pricing is to give an impression of quality to the consumer. We performed a great deal of regression analysis to determine the optimal pricing levels for each brand. In addition, we utilized our vast market experience at different pricing levels to determine our current pricing. We again determined that our SUSI brand is out of line with the optimal price level suggested through the Markstrat3 regression analysis. In Period 6, we again modified this brand to fine-tune our focus on the preferences of the Others. We increased the price in order to make consumers aware that this was a third-generation brand, better than the previous two. Again, this strategy was successful as the demand for this brand increased by 15.8 percent in Period 7. The SUFF brand is also out of line with its optimal pricing, but our market experience indicated that $369 was all the competitive marketplace would bare. The market has supported the price levels on our remaining brands. We do not foresee any major price discounts being necessary at this time. We do support minor price variations to stress modifications or stimulate increased sales for a slower moving brand. The exhibit below offers a visual display of our current Pricing Strategy for Period 8: Segment Estimate Team U Brands Current Price Optimal Price*
SUSI SUSU SUFF SULI SUPR $214 $250 $390 $480 $514 $250.00 $270.00 $369.00 $480.00 $512.00

* This estimation was acquired through regression analysis of ideal values provided in the Markstrat3 Program

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Promotion Strategy
Our overall advertising strategy follows the Markstrat3 suggested format. This format includes utilizing repetition to emphasize a complex message to the consumer in each targeted segment. This is especially valuable when Perceptual Objectives are used in an attempt to reposition a specific brand. In Period 8, we are continuing our advertising strategy of assigning 100 percent of each brands Media Budget to the specific targeted segment. To determine our overall advertising expenditures, we roughly estimate an adequate percentage (40% to 70%) of our annual budget to spend on advertising every period. This estimate varies according to our budget limit, sales force needs, brand awareness, and brand modifications per period. In Period 8, our advertising expenditures, including media and research, are 49% of our budget. We are utilizing our large experienced sale force as an additional tool to further the communicative strength of our brands.

New Brand Development

Currently, we do not have any pending modifications or new projects for the Sonite market. It may become necessary in several periods to reevaluate the characteristics of our SUSU and SUPR brands as we track their progress in the marketplace. However, at this time we are satisfied with the excellent positioning of these brands. We have introduced five Sonite brands and have completed a Feasibility Study of a possible brand (PVUMM) for the Vodite market. The completion of this project is contingent upon our available budget for Period 9. Our PVUMM project has been shelved for Period 8 due to lack of available funds. If our projected budget for Period 9 holds true (based on decisions made for Period 8), we expect to introduce our Vodite brand in Period 10.

MARKETING ACTION PLANS

Period 8: Firm U will continue to evaluate all of its competitors brands and their intended market

segments for the Sonite market. The Research and Development Department will modify an existing brand according to Sonite interest in order to gain additional market share. (SULI) The Research and Development Department continues to evaluate research studies aided by a completed Feasibility Study for the Vodite market. The Advertising Department continues to promote all existing Sonite brands targeting specific market segments with their intended brands, with discounts and factory rebates on selected items. The increased sales force will be utilized to promote the new displays communicating these discounts and rebates. promotional and advertising expenditures in order to have sufficient budgeting capital to enter the Vodite market. The shelved Vodite project (PVUMM) will be re-evaluated by the Research and Development Department, and modifications may be made in order to meet expected future consumer preferences. Further research studies will be purchased for the Vodite market. The Advertisement Department will begin to promote the future Vodite brand (PVUMM) in the form of a Grand
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Period 9: Firm U will begin a harvesting strategy for their cash cow brands by decreasing

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Introduction. The sales force will be utilized to promote the future Vodite brand (PVUMM) to all distribution channels, and to preserve market share for the already existing Sonite products.
Period 10: Firm U will introduce the Vodite brand PVUMM. The Advertisement Department will

focus on using all forms of media (television, radio, electronic bulletin boards, and newspapers) to promote the new brand. The major part of the sales force will be utilized at display sites communicating the new PVUMM brand to the consumer. A smaller portion of the sales force will be pushing the existing Sonite products. A harvesting strategy will continue on the Sonite products to reap profits and increase cash flows. The Research and Development Department will continue to modify existing Sonite products to meet consumer demands, and also evaluate Vodite research studies for potential modifications that may be necessary to meet consumer preferences.

PROJECTED PROFIT AND LOSS STATEMENTS

PROFORMA STATEMENT - CONTRIBUTION BY BRAND
Sonite Brands Base R&D project Sales Units Sold Average retail price Average selling price Revenues Production Units produced Current unit transfer cost Average unit transfer cost Cost of goods sold Units in inventory Inventory holding cost Inventory disposal loss Contribution before marketing Marketing Advertising expenditures Advertising research expenditures Sales force Contribution after marketing K$ K$ K$ K$ -6,459 -642 -6,879 62,502 -1,312 -131 -3,371 37,933 -1,400 -140 -963 5,562 -1,100 -110 -482 -93 -1,312 -131 -1,261 9,186 -1,335 -130 -803 9,914 U $ $ K$ U K$ K$ K$ 793,600 106 -88,150 306 -3 0 76,481 440,100 65 65 -28,733 75 0 0 42,746 60,500 180 180 -10,887 20 0 0 8,065 17,800 199 205 -11,827 12 0 0 1,599 190,100 111 111 -21,144 100 -1 0 11,890 85,100 183 183 -15,561 99 -1 0 12,181 U $ $ K$ 833,346 295 198 164,635 440,072 237 162 71,479 60,480 470 313 18,952 57,792 362 232 13,426 190,000 262 174 33,035 85,001 497 326 27,743 Unit Total SUSI PSUS2 SULI PSULI SUFF PSUF2 SUSU PSUS3 SUPR PSUL2

PROFORMA STATEMENT - COMPANY PERFORMANCE

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Unit Sales Units Sold Average retail price Average selling price Revenues Production Units produced Cost of goods sold Inventory holding cost Inventory disposal loss Contribution before marketing Marketing Advertising expenditures Advertising research expenditures Sales force Contribution after marketing Other Expenses Market research studies Research and development Interest paid Exceptional cost or profit Net Contribution Next Period Budget K$ K$ K$ K$ U K$ K$ K$ K$ U $ $ K$

Total 833,346 295 198 164,635 793,600 -88,150 -3 0 76,481 -6,459 -642 -6,879 62,502 -557 0 0 0 61,944 24,800

Sonite Market 833,346 295 198 164,635 793,600 -88,150 -3 0 76,481 -6,459 -642 -6,879 62,502 -494 0

Vodite Market

-25 0

* Information courtesy of the Markstrat3 Marketing Plan Report for Period 8.

CONTROLS
By persistently monitoring sales, purchase intentions and brand perceptions for all of our brands, we are more adequately equipped to determine the success of our advertising by segment. This allows us to achieve maximum market share and revenues in the Sonite market. At this point, we feel that our sales force is adequate. As we come closer to entry into the Vodite market, we will adjust our sales force accordingly. We are satisfied that our mission to gain market share has been extremely successful over the past seven periods. There is still challenging competition in the Sonite market and we will continue to improve our brands and seek to expand into new and growing markets. We will base a change of strategy on; the performance of our brands, changes in the overall market situation, and /or new market opportunities that will enable us to increase profits for our shareholders.

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