8/9/2019 Answer Sheet 13

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SALES REPORT

Name

1. The number of magazines I produced was

2. Total demand for my magazine was

3. Did you overproduce, or under produce? And by how much? How much net profit did you make?

4. Write a report looking at how you could have made more profit with your first issue.

You are writing this report for the chairman of Pepper Publishing and the shareholders of the

company, so make your report as upbeat as possible, and give some convincing reasons why the future

looks bright for your publication.

You must use each of the following terms at least once in your report: sales, sales revenue, profit, next

issue, strengths, weaknesses, shareholders, promotion, free gift, distribution, market research, product

life cycle

You might wish to include the following calculations: Gross Profit Ratio, Net Profit Ratio.

If you have lots of unsold magazines, what are you planning to do with them? Try and make it appear

that you had planned things to turn out the way they have, and if things have gone badly wrong then

blame someone or something else!

Memo to: Mr Gordon Pepper, Chairman, Pepper Publishing

From: The Marketing Director Subject: Performance of the first issue of the new magazine

250,000

188,000

Answer Sheet 13

Holdsworth Associates

We overproduced by 62,000 copies, which is not a bad result. We did well and made a net profit

of 256,400. After dividends and corporation tax, this left us with 128,200 retained profit.

Some examples of things that could be included in the sales report:

A. I am very pleased with the net profit we have made on our first issue. The net profit was an

impressive 256,400, giving a net profit ratio of 47%. This figure is calculated by dividing my

net profit by sales revenue and multiplying by 100. It shows that for each 1 of sales revenue,

we made 47p net profit. Shareholders can be pleased with the dividend they have been paid.

B. I know that it appears that we have made a big loss on the first issue of the new magazine, but

it is important that certain facts are realised. We expected to make a loss because we used apenetration price. It is not unusual for new magazines to make big losses in the first issues.

The short term situation may look unpromising, but in the long term, when we have attracted

new readers, then we confidently expect to make a profit. We are at the early stages of our

product life cycle, and as we go into the growth and maturity phases, we expect to increase our

profitability. It is fair to say that we were let down by poor market research. Many of our

decisions were based on this faulty data, and I would recommend that the people responsible

for this be disciplined.

C. It looks as if we overproduced by 150,000, but this was part of our marketing plan. We intend

to give the unsold copies away at concerts over the next few weeks. This has always been a

part of our marketing plan, and will increase sales and profits in the long run.

D. Even though the magazine did very well, there are opportunities for us to improve. New

methods of distribution should be looked at, and more spent on advertising and promotion.