BACKGROUND INFORMATION

Marketing management plays an important role in business management as they are being

responsible for the flow of goods and services from the producers to consumers. Marketing

provides customer satisfaction and thereby earning profits through consumer demand. As they

perform marketing plan, strategy, research, product planning and development, pricing,

advertising, selling and distribution with a view to satisfy the needs of consumer, business and

society.

In this case, the ABC Manufacturing Company encountered a loss of US $1,000,000 as it

is shown in the final audited Profit and Loss (P&L) Statement report on December 31, 2015. The

Production manager assumes that the Marketing Department is the reason why the company

encountered such losses. They point out that the difference lies in the inability of the Marketing

Department to sell all of their produced units, which sales resulted to 70 percent of the units

produced. Also, they point out that the Marketing Department must be flexible and have a

workable marketing strategy in dealing with the customers to buy the product or make them wait

to purchase until stocks are replenished.

The Marketing Department had a problem in their sales because of the delayed release of

the marketing budget by the Finance Department which happened only on the last quarter of the

year. Although such circumstances, the Marketing Department generate a sales revenue of 70

percent of the production and were more than the targeted amount.

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PROBLEM STATEMENT

Main Problem

ABC Manufacturing Company encountered a loss of US$1,000,000 as it is shown in the

final audited Profit and Loss (P&L) Statement report on December 31, 2015. Problems and

mismanagement that were discovered on the 2015 P&L Statement lies in the three main

departments (Production, Marketing and Finance).

Causes of the Main Problem

 Inability of the Marketing Department to sell all of the produced units.

 The delayed release of the marketing budget by the Finance Department which happened

only on the last quarter of the year. That causes a problem in the sales take up of the

Marketing Department.

 The Production Department exceeded their targeted costs because of the rework and repair

expenses due to some defects of the units produced.

 Quality control of the Production Department is not maintained properly before the

production of units.

 Stocks of the produced units in the inventory were not enough for the customer demand.

 The Finance Department did not control or limit the expenses of the Production Department

that cause bloated production costs.

 The Finance Department did not overlook the financial statement that they were audited

right from the start of the quarter or in each quarter if there are some possible losses

happened.

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  The General Manager did not also overlook the financial statement report that the Finance

Department submitted to him every MANCOM meeting if there are some possible losses

happened in the first, second or last quarter.

ANALYSIS OF DATA

The ABC Manufacturing Company’s Management Committee (MANCOM) conducted a

meeting on February 19, 2016 that was chaired and led by the General Manager with his executive

secretary who provided a brief summarized minutes of the meeting. The issue is all about the 2015

business operations of ABC resulted to a loss of US$1,000,000 based on the audited final Profit

and Loss (P&L) statement report because the General Manager discovered flaws and

mismanagement in the three main departments. After the analysis of the company’s operations,

the three senior managers who are the Production Manager, Marketing Manager, and the Finance

Manager were asked by the General Manager to explain their own department’s role regarding in

the negative results of business operations.

The Marketing Department is supposed to build the goodwill of the enterprise, in the

market by manufacturing and distributing quality goods at affordable process that will maximize

the customer satisfaction and thereby earning profits through customer demand. It is accountable

for planning, organizing, directing, coordinating, motivating and controlling the marketing

activities. In effect, it is the demand management under customer-oriented marketing philosophy.

Based on the analysis of the case, one of the causes of the negative result of the company’s

business operations is the production department whose role is to produce a better-quality product

that will satisfy the customer needs and wants. They were able to meet the production quota but

exceeded their targeted costs because of rework expenses and repair costs due to some irregular

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defects of the units being produced and replenishing raw materials inventory and supply parts. So,

it resulted to a bloated production costs and some of produced units does not undergo quality

control that brings the Marketing Department difficulty in marketing the company’s product.

Second, is the supervision and handling of budget by the Finance Department. If there were no

delayed release of the Marketing budget from the Finance Department, there were a possibility of

an increase of sales revenue. Also, if the Finance Department tracks and control the exceeded costs

of the Production Department there will be no bloated production costs. Third, is the financial

statement reports that were always submitted by the Finance Department to the General Manager

every MANCOM meeting. The General Manager did not overlook the financial statement report

that he always received from the Finance Department and check if there are some losses happened

in first, second or last quarter. Bloating of losses can be avoided if the General Manager did found

the losses right from the start and command the three main department to stop the operation and

come up with a better plan to avoid increasing of losses.

DISCUSSION OF SOLUTIONS

The Pareto principle is also known as the 80/20 rule. For example, 80% of our business

comes from 20% of our customers. The principle itself states that 80% of the effects come from

20% of the causes. The reason that the Pareto principle is used together with the marketing

relationship, is that the bulk of the profits and long-term relationships will probably arises from

20% of the customers. Therefore, we need to know as much about our customers behavior, needs

and wants.

The marketing mix is one of the most famous marketing terms. The marketing mix is the

tactical or operational part of a marketing plan. The marketing mix is also called the 4P’s and the

7P’s. The 4P’s are Price, Place, Product and Promotion shown in Appendix – Figure 1. The

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services marketing mix is also called the 7P’s and includes the addition of Process, People and

Physical evidence. It is the same with the marketing mix. The offer you make to your customer

can be altered by varying the mix elements. So, for a high profile brand, increase the focus on

promotion and desensitize the weight given to price. Promotion includes all of the activities

marketers undertake to inform consumers about their products and to encourage potential

customers to buy these products, Solomon et. Al (2009)

By using these principles, we tracked the possible causes of the main problem and created

a possible solution or suggestions based from the assumptions and research after using Pareto

principle and the Marketing Mix strategy as a reference.

As a Marketing, our first solution is the remaining 30 percent stocks should be sold within

one month to shoulder the losses through the promotion of “buy one and get the 2nd item 50

percent off.” Since our price for our product is 50 percent higher of the production cost we can

still have a profit of 50 percent if we sold 2 products with a 50 percent off. This solution will be

possible if the products of the ABC Manufacturing Company are necessities.

RECOMMENDATION

The group recommends that the General Manager should handle the responsibility in

controlling the back-and-forth release of the budget between Production and Marketing. Since, the

Production and Marketing Department are relative to each other and it is under by the General

Manager. Also, the Finance Department which can be a direct contact with the General Manager

in terms of handling budget and other finances.

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 The General Manager should have been able to manage the company by collaborating with

each and every department head or managers to have an update and reports about the minor

problems which may cause a lot of trouble in the latter part.

The Production Department of ABC Manufacturing Company must pay close attention to

the quality control of the produced units in order to meet the customer demands. Otherwise, they

would get stuck in a loop of recalled units and counter-productivity.

APPENDIX

Figure 1. The Marketing Mix

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REFERENCES

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http://www.yourarticlelibrary.com/marketing/marketing-management/5-objectives-of-

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 Sai, S. Marketing Management: Concept and Objectives. Retrieved April 4, 2019 from

Your Article Library:

http://www.yourarticlelibrary.com/marketing/marketing-management/marketing-

management-meaning-and-objectives/48798

 Hill, B. (2013). Weaknesses of a Marketing Plan. Retrieved April 5, 2019 from Azcentral:

https://yourbusiness.azcentral.com/weaknesses-marketing-plan-4848.html

 Hill, B. (2013). Projected Profit & Loss Statement in Marketing Plan. Retrieved April 5,

2019 from Azcentral:

https://yourbusiness.azcentral.com/projected-profit-loss-statement-marketing-plan-

14393.html

 Friesner, T. Marketing Mix. Retrieved April 5, 2019 from Marketing Teacher:

https://www.marketingteacher.com/marketing-mix/

 Friesner, T. Pareto Principle. Retrieved April 5, 2019 from Marketing Teacher:

https://www.marketingteacher.com/pareto-principle/

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