The Different Categories of the Targeted Market - Essay Example

Michelada is an alcoholic beverage of Mexican origin and it is being introduced in France. Apparently, this product is seemingly new to the market inthis country and various measures have to be taken in order to successfully launch it. As such, this paper seeks to analyse the financial factors that can affect the viability of this product in the French market. The paper is divided into different categories and these focus on various issues that can impact on the viability of this particular product. a). The anticipated budget for advertising of this product €3000 per month and this amount will mainly include radio adverts, posters as well as print. For instance, RTL radio has the largest audience in France during prime times and an advert costs €5 per 30 seconds and two adverts will be flighted per day during peak hours. The adverts will be aired on all the six popular radio stations in France at an average cost of about €1800 per month. On the other hand, print adverts can cost around €900 while internet services cost €30 per month. Altogether, the total cost of advertising is about €3000. As noted, about 77% of the French citizens drink alcohol but they mostly prefer wine unlike in other countries. In order to reach the different categories of the targeted market, it is imperative to invest in advertising given that it is anticipated that this product will generate average revenues of about €5 million per annum. These projected revenues ought to be substantiated by advertising. At least two adverts per day on radio during peak hours will be okay given that this is the period when the targeted clients for this product are expected to be listening to radio. This translates into about fourteen television adverts each week and print adverts can also be flighted in popular newspapers as well as magazines. Drury (24) concurs that money spent on advertisements should not exceed the anticipated revenue to be generated. ii. Pro financial statements and budgets A. Marketing objectives 1. The expected percentage of targeted markets is about three percent. There are approximately five million potential customers and the males constitute about 17 % of the targeted customers. From this figure, it has to be anticipated that not all the targeted customers will buy the product given that it is still new hence a three percent bracket will be reasonable. As time goes on, this figure can be increased as people get used to the beverage offered. 2. The expected sales in the first five years are expected to reach a total of about €2,5 million. On average, it is anticipated that a customer can spend about €1000 on alcoholic beverages and it is estimated that the three percent of the potential consumers of Michelada will spend money on this product. On a monthly basis, about €5million can be realised through sales to the targeted customers on the basis of the estimated figures. Given its uniqueness, it is anticipated that the beverage will first face challenges with regards to market penetration but it will gain considerable recognition as people become use to it in the long run. B. Marketing budget Marketing involves activities that are designed to fulfil the customer expectations and needs profitably by a particular business (Kotler & Armstrong, 6). As such the marketing budget is split as follows: 1. Advertising costs approximately €3000 while marketing costs for activities such as personal selling, sales promotion and publicity are pegged at €2000 altogether. These techniques do not require a huge budget since they are often carried out by people who are also members of this particular organisation. 2. Distribution expenses are pegged at around €100 000 given that there are various expenses related to transport costs and other related logistics. The beer will be shipped from USA to France since this is seen as a cheaper mode of transport with regards to long distances. Road transport will also be used for internal distribution in France to wholesalers as well as retailers of the beverage. 3. Product costs are pegged at about €500 000 since this beverage is made with an assortment of raw materials such as malt, maize as well as other ingredients since this is a beer unlike wine. Some of the products are imported and that is the reason why the production costs are slightly higher. C. Pro forma annual profit-and-loss statement The wholesale price will be used for all beer products and this has been pegged at €18 per case of 24 units. After production costs as well as distribution expenses, the wholesalers are able to sell a case of beer at a profit. The profit margin use is expected to be about However, of notable concern is the fact that the French government has imposed taxes on all alcoholic beverages hence the profits of the organisation cannot be overemphasised. In order to check the level of profitability of the organisation, its operational costs have to be lower that the revenue generated and loses are recorded when the costs of operating the business are higher than the anticipated revenue generated. Under normal circumstances, a business which is operating viably is able to maintain its operational costs to lower levels compared to revenue generated. 1. Year 1 to five is likely to be characterised by turbulent events given that the product would not yet have appealed to the interests of as many people as possible. During the first year, sales are expected to be lower given that the product will be still in its preliminary stages of the lifecycle. However, positive changes are expected especially for year three when all potential customers have either tested the beverage or heard about it. 2. Basically, a holistic approach has to be taken in order to successfully launch this brand in the market given that there are various factors that are likely to affect its viability. For instance, government regulations in France prohibit any form of alcohol advertisement which is more than 1.2 % on television and the legal age of alcohol consumption is now 18 years. Given that the target market is around three percent of the whole population, a variety of marketing concepts have to be applied in order to improve the viability of the brand. Conclusion Basically, there are different factors which can afford the financial performance of Michelada, a Mexican brewed beer being introduced in France. The endeavours to introduce this brand are likely to be hampered by stiff competition in this industry which is characterised by wine and other strong stuffs. However, it is anticipated that annual revenue of about €5 million can be realised if various marketing concepts such as advertising, personal selling as well as publicity are carefully implemented. Advertising is seen as the most viable marketing technique that can be introduced by this organisation given that it can reach a wide range of people such as RTL radio which has the largest audience in France. Works cited Drury Colin. Management and cost accounting. 6th Edition. London, Thomson,2004. Print. Kotler, Philip & Armstrong. Principles of Marketing. Upper Saddle River: NJ. Pearson Education. Print. U.S. Department of State. "Background Note: France. People." State.gov. 27 May 2011. U.S. Department of State. Web. 27 Sep. 2011. . Read More