I agree with Lisa’s view to a certain extent that the marketing budget is the most important component in the marketing plan. Harry has set a market objective of two million subscribers by 2015; a target that is very ambitious to achieve a fifth of the forecasted market share which is seen as very unrealistic with a basic marketing budget and Robert media plc will need to do a higher proportion on research than normal which will cost a lot more than usual. Another reason why the marketing budget is so important is that Roberts’s media is changing from print format to digital as they seek to achieve their object of increasing ROCE to 8%.
Digital media is a new market for the business and therefore will need extensive research to see what the target markets’ needs and wants are. Although the marketing department had previously won awards for the way it promoted print magazines, but was concerned that the new technology would require a very different approach. As digital is completely different to print media, it obviously needs research conducted. However, Harry is being stubborn and dismissive stating that the marketing budget is un-important and will not provide additional funds.
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This could therefore mean that the businesses target the wrong people and that their objective to increase the ROCE to 8% could be dented and un-applicable. The rivals of Roberts media plc are already one step ahead of the business as they were already launching their own digital magazines within the next sic months and had already started their marketing campaign. This will have a big effect on the Roberts media as their targeted customers are already being targeted by rivals which could therefore mean fewer sales in the future.
As the business is behind its rivals, a big promotional campaign will be needed in order to attract potential customers away from rivals. A big promotional campaign will require a big marketing budget but is what is needed in order to out beat its competitors in the race for customers. However, I agree with Harry not to provide addition funds to the marketing budget as the financial situation of the business is not very stable at this moment in time. The return on capital has fallen from 10% to 2% meaning that it will not be wisely to
invest as it’s not really worth it to invest. Along with the poor state of ROCE, the current ratio is also in a bad state fallen from 1. 5:1 to 0. 5:1. This means for every 50p of current assets the business had ? 1 of liability. Having such a poor financial position will rupture the finance available and will need to use the scares finance available wisely. To conclude, I certainly agree with Lisa that the business’s marketing budget is the most important feature on the marketing plan.
This major change from print to digital will cost a lot and will be in need of a big marketing budget to be successful. Also, Roberts media is already behind its rivals on its marketing and therefore will need something big to attract customers. Finally, Harry has set a very ambitious objective and therefore it will need a big marketing budget to be able to fulfil its purpose. Although the financial state of the business is poor, harry will need to help its marketing team and provide which they feel what is needed as the long run.