Based on our objectives, presented in table 5 is the financial expenditure of the marketing action plan over a 6 months period. At this point in time the outlet in Egham is not generating any revenues and is out of service.
The total marketing expenditure is of 10400£ for the first 6 months of operation. The first month will be the most capital intensive making up for 47% of our total budget. We are following a burst strategy putting most of our funds at the start. The reason behind this decision comes from the fact that we have a relatively small budget and we believe this will make a bigger impact on the market than if we spread the costs over 6 months. We will however still be incurring monthly costs for the flyers, radio ads and Facebook likes of 900£ per month as well as 2000£ agency fees which we will be collecting in months 1 and 3.
We took five possible scenarios which vary from the most optimistic to the most pessimistic forecast possibilities. We have made these categories based on the amount of customers attracted to our outlet coming from the marketing action plan. We believe that we can expect 3.50£ per customer purchase (price of one scoop of ice cream).
Table 1 illustrates the amount of monthly sales which will come in from our marketing efforts in months 2 to 6 where marketing spending is the same. Table 2 shows the amount of customers and sales generated on the first month of our campaign which is the most capital intensive. Table 3 exposes the return on investment made from our marketing strategy.
These scenarios range from 100% to 10% success rate of people making a single and recuring purchase which are coming from our marketing efforts. We believe 20% of people that have been targeted by our marketing plan will be making a purchase.
As we can see from table 2 the first month of our marketing plan will be the busiest coming from the spending in various marketing channels. We are expecting to have 1040 purchases made. This will amounts to 3,640£ in sales.
Table 3 illustrates a positive return on investment even in the pessimistic scenario section of 10% if we increased that period to a year. We believe that realistically 20% of people that have been targeted by our action plan will make a purchase. The ROI for 20% purchase rate is of 230% generating a total of 19,390£ sales coming from 5540 customers making a single purchase after 6 months.
In order to understand in more details the financial process over the next 6 months of operation we carried out a payback period forecast. The payback period is the time by when the marketing budget will be paid back for. Since we are expecting an average spending of 3.50£ per customer, we will need to attract a minimum of 2400 customers in order to cover our marketing investment. As we can see from table 4, at a marketing performance of 20%, we will be able to pay our marketing budget back in 4 months of operations.
We strongly believe that we could get to the 30% mark however we want to be very conservative in our calculations.
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