Posted: November 25th, 2014

Group Leader: Colby Cox

profit projection

Kitto Kids Kit Kat Krunch
Profit Projection Outline
Group Leader: Colby Cox
By: Colby Cox
1.    Price per unit of product
a.    Price of competitors per oz. (retrieved from Walmart.com)
i.    Reese’s Puffs: $0.25
ii.    Cinnamon Toast Crunch: $0.23
iii.    Lucky Charms: $0.23
iv.    Apple Jacks: $0.23
v.    Cocoa Pebbles: $0.24
b.    Price of Kit Kat Krunch in different box sizes
i.    Price of 10 oz. box: $2.50
ii.    Price of 13 oz. box: $3.12
iii.    Price of 20 oz. box: $4.75
c.    Supporting price decision
i.    Median of competitors’ pricing
ii.    Offers best deal on largest product size
iii.    Makes most profit on smallest product size
iv.    Not the cheapest among competitors to show there is not a quality decrease
v.    Wal-Mart’s services were used because that is where the product will be distributed
2.    Demand for product
a.    Estimated share of market
i.    Kellogg’s, General Mills, and Post make up 73% (Andrews, 2014)
ii.    Striving to gain 10% of the remaining market, Kit Kat Krunch would have 2.7% of the cereal market
b.    Projected demand for product during first year of sales
i.    Approximately 2.7 billion boxes of cereal are sold annually (Andrews, 2014)
ii.    Correlating 2.7 billion boxes sold with a 2.7% share of the market, 72,900,000 is the estimated number of boxes sold within the first year of sales
c.    Yearly increase in demand with implemented marketing plan
i.    With successful promotions, Kellogg’s demand increased by 2.5% in 2013 (retrieved from Kellogg’s 2013 Annual Report)
ii.    General Mills’ increased their demand by 3% in 2012 with effective commercializing (retrieved from General Mills 2012 Annual Report)
iii.    Aiming for results similar to Kellogg’s and General Mills, our projected increase in demand is 2.25% annually over a 5-year period during the implementation of the marketing plan
3.    Cost of 5-year marketing plan
a.    First and second year
i.    Nickelodeon commercializing, two every Saturday morning
1.    $70,000 per commercial spot, therefore approximately $7,280,000 annually (Mifflin, 1997)
2.    Attempt to reach children first
ii.    Full-page advertisement in Sport Illustrated Magazine, once a month
1.    Approximately $194,350 for single full-page ad, therefore $2,332,200 as a yearly rough estimate (retrieved from http://www.gaebler.com/Sports+Illustrated-magazine-advertising-costs++31059)
2.    Allows a wide spectrum of readers, including teenagers which remains consistent with our target market
b.    Third and fourth year
i.    Continue with Nickelodeon and Sports Illustrated advertising
1.    To reinforce need for product
2.    Allows for an efficient medium to communicate to target market, therefore it is a constant means of advertising
ii.    Cartoon Network commercializing, two every Saturday morning
1.    $65,000 per commercial spot, therefore approximately $6,760,000 annually (Mifflin, 1997)
2.    Reaches a slightly older audience than Nickelodeon
c.    Fifth year
i.    Continue with Sports Illustrated advertising
ii.    Increase to three Saturday morning commercials on  Nickelodeon and Cartoon Network
1.    Approximately $21,060,000 combined
2.    Repeated use over a short time period greatens strength of advertisement
4.    Profit Projection over 5-year period excluding manufacturing costs
a.    First year
1.    Revenue: 72,900,000 * $3.12 = $227,448,000
2.    Cost of marketing: 7,280,000 + 2,332,200 = $9,612,200
3.    Projected profit: $217,835,800
b.    Second year
1.    Estimated demand increase: 72,900,000 * .0225 = 1,640,250
2.    Revenue: 74,540,250 * $3.12 = $232,565,580
3.    Cost of marketing: 7,280,000 + 2,332,200 = $9,612,200
4.    Projected profit: $222,935,380
c.    Third year
1.    Estimated demand increase: 74,540,250 * .0225 = 1,677,156
2.    Revenue: 76,217,406 * $3.12 = $237,798,307
3.    Cost of marketing: 7,280,000 + 2,332,200 + 6,760,000 = $16,372,200
4.    Projected profit: $221,426,107
d.    Fourth year
1.    Estimated demand increase: 76,217,406 * .0225 = 1,714,892
2.    Revenue: 77,932,298 * $3.12 = $243,148,770
3.    Cost of marketing: 7,280,000 + 2,332,200 + 6,760,000 = $16,372,200
4.    Projected profit: $226,776,570
e.    Fifth year
1.    Estimated demand increase: 77,932,298 * .0225 = 1,753,477
2.    Revenue: 79,685,775 * $3.12 = $248,619,618
3.    Cost of marketing: 21,060,000 + 2,332,200 = $23,392,200
4.    Projected profit: $225,227,418
References
Andrews, Ryan. 2014. All About Breakfast Cereals. Retrieved from http://www.precisionnutrition.com/all-about-breakfast-cereals
Mifflin, Lawrie. 1997. Nickelodeon, the children’s cable network, wins viewers, but loses out on ad rates. The New York Times.
General Mills 2012 Annual Report. 2013. Retrieved from http://phx.corporate-ir.net/phoenix.zhtml?c=74271&p=irol-irhome
Kellogg’s 2013 Annual Report. 2014. Retrieved form http://investor.kelloggs.com/investor-relations/annual-reports/default.aspx
Sports Illustrated – Magazine Advertising Costs. 2014. Sports Illustrated Online. Retrieved from http://www.gaebler.com/Sports+Illustrated-magazine-advertising-costs++31059
www.walmart.com

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44.
etichs

Due Date:  The paper is due on or before the beginning of class on Tueday, November 25th.
Length:  The paper should be from 6 full pages minimum to 7 pages maximum.  All papers must be typed and double-spaced (indented quotes, etc. should be single-spaced if you use them). There is no penalty for turning in a paper that exceeds the maximum page limit–so long as it is concise, well written and edited.
Mechanics:  I strongly suggest that you write an outline of the paper.  The point of writing an outline is to organize your ideas before you write in the form of an essay.  That way, you will be able to spot premises that are out of place or missing from your reconstruction.  Be sure to work through all three parts of the assignment in your outline.  When writing the paper, you may feel a temptation to spend most of your time reconstructing the arguments of Kant and Mill and very little time on your own argument.  Don’t fall prey to this temptation.  All three parts of the assignment are equally important so you should devote roughly equal time and space to all three parts in your paper.
The quality of your paper as a piece of writing (spelling, punctuation, style, grammar, and–especially–clarity) will count in the determination of your grade.  Essential to expressing your ideas effectively is writing clearly and with precision.  All I have to go on in evaluating your arguments is what you have written down.  You may think you have it ‘clear in your head’, but you need to lead the reader step by step through your argumentation.  It might help to have a friend read the paper to let you know where the paper lacks clarity.
You’re trying to develop reasoned arguments to justify a position.  So try this test:  cross out all occurrences of ‘I think’, ‘I personally believe’, ‘I feel’, or ‘it’s my opinion that’; then you’ll see if you have backed up your opinions with reasons and evidence.  The reader is not interested so much in the fact that your convictions are yours, but rather the clarity and cogency of the reasons, arguments, and evidence you have in support of your opinions (so that your opinions are well-founded).  The main place that you will need to identify the arguments as your own is in the last section of the paper, so this is the primary place that you will need to refer to what you’ve written as your own position.
Don’t waste time and space with Vague Generalities (e.g. ‘Justice is often cited by moral philosophers as being important,’ ‘the question of rights has perennially plagued thinkers,’  ‘Mill did a really good job arguing…’).  Rather, dig right into the arguments:  ‘Kant holds that…and argues for it by claiming that…’  ‘An objection to the above premise is…’  ‘I will argue that…’ etc.  Cross out anything that might be considered ‘FLUFF’ in your rough draft.
Try to capture the arguments in your own words.  The use of too many quotes is a sign that you have not taken the time to think through the ideas in your own terms.  If you do use the phrasing of other authors, you must quote and footnote them or it is plagiarism.  NOTE:  this is not a research paper, your time will probably be better spent going over the relevant passages in the original texts and developing the argument rather than exploring the secondary literature.  If you do choose to consult any secondary literature (of any form–including the internet), you must include a citation to the source in the notes and in a bibliography even if you do not quote the source.

Assignment:  This essay should be written in three related parts.  It will help to adopt the stance of a sympathetic interpreter as you reconstruct Mill’s and Kant’s arguments in the first and second sections of the paper.  The order in which you reconstruct Mill’s and Kant’s arguments is up to you.  You could, for instance, talk about Kant first and Mill second, or vice versa.  You may feel tempted to raise criticisms of their positions as you develop your reconstruction of the arguments, but do so only when it serves the purpose of aiding in the clarification of the points.  Save your substantive objections until the end.
First:  In Utilitarianism, John Stuart Mill presents an argument for the claim that happiness is one and the only thing good in and of itself.  Based on this claim, Mill argues that the principle of utility is the primary principle of morality.  Present the main steps that Mill gives for claim that happiness is the end of the primary principle of morality.  Concentrate on making clear what the main steps are and how they are connected.  If you think there are any important steps missing or suppressed in Mill’s arguments that can be filled in, then do so.
Second:  In Grounding for the Metaphysics of Morals, Kant argues that the primary principle of morality must have the form of a categorical imperative and the end of humanity.  As in the previous section, present the main steps that Kant gives for these two parts of his moral theory.  If you think that there are any important steps missing or suppressed in Kant’s arguments that can be filled in, then do what you can to reconstruct such steps.
Third:  It is now time for you to take a position.  Having presented the two arguments, locate, state and clarify one major point of disagreement.  Be sure to focus on a disagreement in the premises leading up to the conclusion.  It is clear that Mill and Kant disagree about what the fundamental principle of morality is, but the point of this paper is to explain how disagreements about the conclusions can be traced back to disagreements in the premises used in their arguments.  You should be able to locate the specific premise in each of their arguments where the disagreement occurs.  Next, choose one of the two positions (either Mill or Kant) and take a side in the debate.  Try to clarify your thesis.  Focusing on the point of disagreement that you have located, try to develop a defense of the premises used in the position you have chosen to defend and a criticism of the premises used in the other argument.  Finally, try to continue the discussion between the two philosophers by working through and evaluating the strengths and weaknesses on both sides of the debate.

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