The paper 'Various Changes to the Marketing Campaign " is a great example of marketing coursework. The budget variance is unfavorable because actual marketing cost for the three months exceeded the master budget, which means that Shrub Master Corporation spent more on this campaign than what was planned. There are a number of reasons for the unfavorable variation as discussed below. Marketing Activity Master Budget Item Description Units Quantity Rate ($) Total ($) Mailer Distribution Campaign Design 4 colour, 7 inches by 5 inches mailer No. 1 550 550 Printing Each stack has 800 mailers Stack 2 350 700 Distributor training Paid training Man-hours 12 10 120 Mailer distribution 6 boys each working 5 hours a day for 8 times Man-days 240 10 2,400 Subtotal 3,770 Newspaper Advertising Ad design Full page singe insert, coloured Advert 1 500 500 Advertisement Full page singe insert, coloured ad run for five consecutive Saturdays Days 5 9,000 45,000 Subtotal 45,500 Radio Commercial Ad design 60-second radio commercial/jingle Jingle 1 750 750 Airing of commercial 60-second commercial repeated 8 times in a day Days 20 2,000 40,000 Subtotal 40,750 TOTAL 90,020 Part B Task 1 Actual Budget for the First 3 Months Item Description Units Quantity Rate ($) Total ($) Mailer Distribution Campaign Design Full-color mailers printed on a 9 x 6 mailer, on a matte type finish No. 1 600 600 Printing Each stack has 800 mailers Stack 1 450 450 Distributor training Paid training Man-hours 12 10 120 Mailer distribution 6 boys each working 5 hours a day for 8 times Man-days 210 10 2,100 Distribution supervision Supervision by a junior staff member Hours 20 25 500 Subtotal 3,770 Newspaper Advertising Ad design Full page singe insert, coloured Advert 1 500 500 Advertisement Full page singe insert, coloured ad for seven consecutive Saturdays Days 7 9,000 63,000 Subtotal 63,500 Radio Commercial Ad design 60-second radio commercial/jingle Jingle 1 750 750 Airing of commercial 60 second commercial repeated 8 times in a day Days 20 1,700 34,000 Radio show host 10 minutes show No. 1 4,500 4,500 Subtotal 39,250 TOTAL 106,520 Task 2: Variance Newspaper Advertising As shown in the graph above, the cost of newspaper advertising exceeded the budget by $18,000 (39.56%).
The primary reason for this variance was the increase in the number of days the advertisement was run. In the budget, this was planned to run for five consecutive Saturdays, but this was increased to seven days. The cost of publishing the advert for one day was $9,000. Therefore, by increasing the number of days by two, the cost rose by $18,000.
Nevertheless, the increase in the number of days the advert was published resulted to increase in publicity. Radio Commercial Although there was an addition of an unbudgeted activity, the 10 minutes radio show, the actual cost of the radio commercial was lower than the planned. The special rates given to the company went a long way to cut radio commercial costs by $6,000. A $300 discount was given for every 60-seconds ad, which cut the airing costs by $6,000. However, this gain was somehow diluted by the inclusion of a 10-minute show, which cost the company $4,500.
Nevertheless, the additional cost did not exceed the savings gained from the discounts the company received. In addition, the company managed to increase coverage and publicity through the 10-minute show while at the same time cutting down on radio commercial costs. Mailer Distribution Campaign There were changes in this element of the marketing campaign but the overall budget remained as planned. Reduction in the number of times the mailer campaign was repeated from eight to seven cut the cost by $300.
Additional cost saving was achieved during the printing of flyers cutting the cost by $250. It is, however, worth noting that instead of the previously planned 1600 flyers, 1500 flyers were printed at a cost of $450. However, this cost-saving was diluted by the inclusion of a junior staff member as distribution supervisor at a cost of $500 and an increase in design cost by $50.