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Frank Lockfeld faces the dilemma of deciding on the number of olive oil gallons to manufacture for the year 1994. Besides, Lockfeld has not assessed the viability of market of the preceding year sales, and thus has to rely on assumptions.
As such, this manuscript mulls over Calambra Oil Company, thereby assessing measures that Lockfeld may apply to minimize losses in his recent business endeavor.
The marketing mix
The 4P’s of the marketing mix entails preparing the right goods and services, considering the needs of customers. It is evident that Calambra manufactures the best oil, as it has been voted in California severally.
Besides, the products ought to be at the most apposite price, whereby the intended consumers can pay for. This is a challenging issue for Lockfeld thus forcing him to make a well-informed decision in order to avoid looming losses.
In addition, the products ought to be in a proper place for customers to have adequate access. Additionally, business people ought to promote their products in order to have a niche, in the competitive market.
California offers a viable market for Lockfeld’s olive oil. Besides, he endeavors to expand the market to North California, along with other places.
In my opinion, Lockfeld has successfully applied the correlation of the 4P’s in the marketing mix. Though he has not assessed the 1993 sales, it is evident that his company’s name has created its name in the available market. As a result, this has given him a major boost in the competitive Californian market.
The Californian population provides a steady market for the Calambra Company olive oil due to its excellent quality, owing to the use of the premium black olives. Besides, the oil acquired the first position, beating 21 competing oil manufacturers.
However, stiff competition still poses a great challenge for the firm, since it places its products at a high price. Fortunately, the firm boasts of steady and loyal consumers thus giving Lockfeld a niche over his competitors. Besides Lockfeld’s accentuated that the oil is from California, boost his markets, owing to the fact that local people are willing to promote more local products.
The number of gallons that Lockfeld should produce poses a serious dilemma to him, since he dreads incurring losses in his new endeavor. As such, he has to make careful and well-informed decisions. His decision on the quantity of gallons to order will be based on various aspects.
For instance, though he has not received the 1993 sales information, he may project on the current 1993 sales. Moreover, he ought to project on the current 1994 market viability. Lockfeld plans to purchase about 3000 gallons as part of the viability test, based on his projection.
Plan for the 1994 remaining oil
It is clear that the firm will not sell all its oil. As such, it is crucial to pre-plan for the remaining oil. This will aid in playing down the losses that it may experience. Lockfeld should set preservation measures for the remaining gallons. Besides, they may be sold at a lesser price and thus reduce the involved reduced earnings.
The Profit and Loss Assumption
|Projected P&L 1993-1995|
|Oil Cases Produced||325||1200||1800|
|Cases Available for sale||300||1150||1755|
|Cost of Goods|
|Bottling ($ 4.0/case)||0||7300||9500|
|Broker (25% of sale)||9000||32800||50900|
|General and Administrative|